Social network meets Sherlock Holmes: investigating the missing links of fraud

Social networks are changing the nature of all human interactions, including those associated with fraudulent behaviour. The extensive use of social networks requires sophisticated analytical tools for fraud investigation. To this end, we have identified a mathematical formulation that represents the fraud investigation process: the Steiner Tree problem. Occupational fraud is a worldwide phenomenon that is both costly and hard to fight. However, social network analysis has the potential to be an invaluable part of the arsenal in detecting fraud. Using a network analysis technique based on a Steiner Tree problem, Ram D Gopal, Raymond A Patterson, Erik Rolland and Dmitry Zhdanov describe a graph-theoretic formulation of the problem and how it can be applied to investigation work on fraud cases.