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SAP takes aim at R32.39tn of fraud

SAP Fraud Management analytic application to help companies detect fraud earlier for reduced financial loss and lower fraud investigation costs.

To help companies worldwide address the estimated R32.39 trillion worth of fraud that occurs every year1, SAP AG (NYSE: SAP) has announced the SAP Fraud Management analytic application.

Powered by the SAP HANA platform, SAP Fraud Management aims to enable enterprises across industries such as insurance, public sector, banking, healthcare and utilities to detect, investigate, analyse and prevent irregularities or fraud in 'big data' environments.

The typical organisation is at risk of losing up to 5% of its revenue to fraud1. In 2011, the total potential projected worldwide losses due to fraud were R32.39 trillion1. SAP Fraud Management is a cross-industry solution intended to help companies address potential, significant losses due to fraud; the high cost and effort for fraud investigation and false alarms; difficulties in keeping track of changing fraud behaviours; and the inadequate or obsolete detection capabilities associated with newer fraud patterns.

As part of the broader portfolio of SAP solutions for governance, risk, and compliance (GRC), SAP Fraud Management is planned to be adaptable to unique business needs and varying industries, in order to:

* Detect fraud earlier to reduce financial loss: The application is planned to provide real-time detection that leverages the power of SAP HANA and offers robust integration capabilities into business systems, along with alert notification and management features.

*Improve detection accuracy at less cost: SAP Fraud Management aims to help minimise false positives through real-time calibration and simulation capabilities on large volumes of data.

* Prevent and deter fraud situations: With the combination of rules and predictive methods, SAP Fraud Management is intended to help users optimise fraud scenario analysis and adapt measures to changing fraud patterns to better prevent fraud.

"The rise of big data is forcing organisations to improve their governance, risk and compliance efforts. Being able to validate who did what, and provide a defensible audit trail, is key in addressing potential fraud," said Michael Rasmussen, chief pundit, GRC 20/20.

"There is a potential for organisations to face massive loss due to fraud. This is becoming even more of a risk with the ever-increasing amount of data being generated. Helping customers detect even a fraction of these cases would represent significant savings - employing advanced solutions to help detect and deter fraud makes sense."

Perfect solution for fraud/theft detection in utilities

The SAP Fraud Management solution enables utilities to detect potential fraud and theft immediately, thus enabling them to act on and prevent future losses as well as limit the amount of immediate loss. To be able to do this in real-time puts the utilities industry at a distinct advantage and puts them one step ahead of fraudsters and thieves. The solution is also able to predict potential bad debtors and proactively manage the situation to ensure ongoing revenue flow.

Compelling case for health insurance industry

SAP Fraud Management for Insurance is intended to help insurance companies automate fraud detection, improve fraud investigation efficiency and avoid payments on illegitimate claim requests. Fraudulent insurance claims and associated costs are at historical highs. In South Africa alone, according to the statistics shared at the recent Board of Healthcare Funders Conference on fraud, it is estimated that the total fraud costs in the South African healthcare system equate to approximately R22 billion each year. This contributes to the cost pressures in the healthcare system, and ultimately affects all medical scheme members, health professionals and the economy as a whole.

Savings for government at all levels through early fraud detection

Tax evasion and social services fraud not only hurt the reputation of government agencies, but contribute to ever-increasing budget deficits. SAP Fraud Management is also planned to help reduce fraud and non-compliance by cross-checking tax returns or social service applications against millions of related data records in real-time, and immediately spotting whether the submitted applications match information from other data sources. Applying predictive algorithms from SAP HANA on a large number of transactions aims to uncover hidden fraud patterns and produce alerts on suspicious transactions that might be missed by conventional fraud and compliance rules.

"Based on the 5% of annual turnover being lost due to fraud - per ACFE Global Fraud Survey, if it was applied to SA's GDP per the World Bank, it would equate to US$20.41 billion - this is roughly equivalent to R188 billion based on the current exchange rate," said Pfungwa Serima, CEO of SAP Africa.

"To address this issue, companies need better analytical tools to identify and prevent fraud as well as stay abreast of changing fraud behaviours in real-time, before losses occur," added Serima.

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As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back-office to boardroom, warehouse to storefront, desktop to mobile device - SAP empowers people and organisations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 190 000 customers (includes customers from the acquisition of SuccessFactors) to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. Words such as "anticipate", "believe", "estimate", "expect", "forecast", "intend", "may", "plan", "project", "predict", "should" and "will" and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the US Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

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Editorial contacts

Keshia Govindsamy
Ogilvy Public Relations
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Keshia.Govindsamy@ogilvypr.co.za
Antonia Stafford Ashton
SAP Africa
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antonia.ashton@sap.com