Procurement fraud: the insider threat to fraud and the ability to prevent with an intelligence led approach to big data and internet of things

Purpose of this paper UK public sector procurement fraud in 2013 was a staggering £2.3 billion for 2013, ranging from supplier selection bribery through to insider trading. Arguably, none of these instances would have been able to take place without someone within the organisations supply chain acting in a manner to benefit themselves or unwittingly taken advantage of for gain by a third party, thus creating the ‘procurement insider threat to fraud’. In response, a whole myriad of resource is deployed in an attempt to combat fraudulent activity, which is harnessed in a manner that is uncoordinated and disjointed, quite often having agencies whom do not share information, audits that are announced ahead of time, processes that are not clear to all supply chain parties and in extreme circumstances, Senior executives ‘sweeping under the carpet’ exposed fraudulent activities. A quick review of processes put into place to combat fraud amount to nothing more than reactionary and frequently the aforementioned lack of cohesion creates its own problems with lessons not being learnt from discovered fraudulent activity, and in some cases exposing a breach into organisations that can be exploited by criminals for many years undetected, with risk to brand, finance and in worst case human life. Therefore, this paper aims to tackle this gap in academic business research, firstly by fostering a debate around potential reactive solutions that leverage off of a collaborative intelligence led approach. It will then explore the degree of fit between the ‘4 pillars of procurement fraud’, big data predictive analysis coupled to the live use of ‘internet of things’ and licensure of procurement/supply chain professionals, all of which will permit stakeholders to identify and decision make weak links within their organisational supply chains. Design/Methodology/Approach The proposed research will undertake a triangulated approach. Initially for the round table discussions a systematic literature review of procurement fraud and crime was undertaken to evaluate the topics most frequently discussed, the date periods and regions, to deliver a set of research questions against gap in peer reviewed research. Secondly, a focus group of industry experts will review the outcomes of the conference round table outputs which will build a questionnaire for dissemination to industry experts in the procurement sphere. These three methods will then be triangulated against the hypothesis that procurement fraud can be prevented by taking an intelligence led view, coupled to use of big data and the internet of things. Findings The initial systematic literature review has found that intelligence is not being shared between organisations in a manner that can lead to a reduction of fraud in the supply chain. For example in the food sector, there are 12 databases of information, however the Serious fraud office only has access to four of them and in addition procurement professionals are unable to poll data contained within to make informed decisions on risk. Practical application The outputs of the research can be utilised by commercial and governmental organisations to assess suitability of utilising an intelligence led approach to detect insider threat within procurement departments.