Turning Data into Defense: How Agencies Are Strengthening Fraud Prevention

Presented by EY

Federal agencies are undergoing a significant shift in how they approach risk, fraud, and program integrity. What was once largely a reactive process—focused on audits, investigations, and recovering funds after the fact—is now evolving into a proactive, technology-enabled strategy aimed at preventing issues before they occur.

Scott Nemeroff, Executive Director of Fraud and Integrity Services at EY, and Megan Kennedy, Executive Director of Risk Management Services at EY, are working closely with government organizations navigating this transition. Their perspective highlights a broader transformation underway across the federal landscape.

At the core of this shift is a move away from the traditional “pay-and-chase” model. Historically, agencies would distribute funds and later attempt to identify improper payments or fraudulent activity through audits and investigations. While effective to a degree, this approach often allowed issues to grow before they were detected.

Today, agencies are increasingly focused on real-time monitoring and prevention. Nemeroff explains that advances in technology are enabling organizations to analyze data faster and more effectively, allowing them to identify suspicious activity as it happens. This shift is not just about efficiency—it’s about fundamentally changing how agencies protect taxpayer dollars.

Driving this transformation is the rapid evolution of technology. From advanced analytics to artificial intelligence, agencies now have access to tools capable of processing vast amounts of data at speed and scale. These technologies are helping organizations move beyond static reviews and toward dynamic, continuous oversight.

However, Kennedy notes that technology alone is not enough. A critical first step is prioritization. Agencies must identify where their greatest risks lie and allocate resources accordingly. With limited budgets and workforce constraints, focusing on the highest-impact areas is essential.

Risk management, as a formal discipline within the federal government, is still relatively young. For years, it was often viewed as a compliance function—something handled by inspectors general or internal audit teams. But that perception is changing. Agencies are beginning to recognize that risk management is not just a requirement; it is a strategic capability that can drive better outcomes across programs.

One of the most important developments in recent years is the growing emphasis on prevention. Rather than responding to incidents after they occur, agencies are investing in systems and processes that allow them to anticipate and mitigate risks in advance. This includes identifying emerging threats, updating controls, and continuously refining their approach.

Maintaining momentum in this effort requires a mindset of continuous improvement. Nemeroff emphasizes the importance of incremental progress—getting “one percent better every day.” Over time, these small improvements compound, leading to meaningful gains in effectiveness and resilience.

Despite this progress, challenges remain. Many agencies are still operating with legacy systems that struggle to keep up with the volume and complexity of modern data. These systems often create silos, making it difficult to share information across programs and gain a comprehensive view of risk.

At the same time, the explosion of data presents both an opportunity and a challenge. While more data can lead to better insights, it also requires sophisticated tools and processes to extract meaningful information. Without the right capabilities, agencies risk being overwhelmed rather than empowered.

To address these challenges, both Nemeroff and Kennedy point to the importance of conducting thorough, data-driven risk assessments. Rather than relying solely on theoretical models or assumptions, agencies can now analyze historical data to identify where issues have actually occurred. This “look-back” approach provides a more accurate understanding of risk and helps inform more effective strategies moving forward.

These assessments also serve as a roadmap for the future. By identifying current vulnerabilities and anticipating emerging risks—such as those associated with AI adoption, cybersecurity threats, and evolving data environments—agencies can position themselves to respond more effectively.

Ultimately, the goal is to ensure that government programs deliver maximum value to the public. Preventing fraud, waste, and abuse is not just about compliance; it is about ensuring that resources reach their intended recipients and achieve their intended outcomes.

The shift toward proactive risk management represents a fundamental change in how agencies operate. It requires new technologies, new processes, and a new mindset. But as Nemeroff and Kennedy make clear, the benefits are substantial.

By embracing prevention, leveraging data, and continuously improving their approach, federal agencies can strengthen program integrity, enhance public trust, and become better stewards of taxpayer dollars in an increasingly complex and dynamic environment.