Assessing the maturity of the current global system for combating financial and cyber fraud

Olha Kuzmenko; Hanna Yarovenko; Larysa Perkhun

doi:https://doi.org/10.59170/stattrans-2023-013

Assessing the maturity of the current global system for combating financial and cyber fraud

Olha Kuzmenko Sumy State University, Ukraine. ORCID:https://orcid.org/0000- 0001-8520-2266 , Hanna Yarovenko Sumy State University, Ukraine; University Carlos III of Madrid, Spain. ORCID:https://orcid.org/0000-0002-8760-6835 , Larysa Perkhun MHP SE, Ukraine. ORCID:https://orcid.org/0000-0002-8667-2312 Statistics in Transition new series, vol. 24, 2023, 1, pages: 229-258 Published online: 24 February 2023 https://doi.org/10.59170/stattrans-2023-013 Citation: Kuzmenko, O., Yarovenko, H., Perkhun, L., 2023. Assessing the maturity of the current global system for combating financial and cyber fraud. Statistics in Transition new series, 24(1), pp. 229-258. https://doi.org/10.59170/stattrans-2023-013

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ABSTRACT

The purpose of the article is to assess the maturity of systems for counteracting financial and cyber fraud with the view of their future integration at global-level. The calculations made by the authors were based on indicators for 76 countries, which characterized each country's level of cybersecurity and its ability to combat financial fraud in 2018. After optimising the input data and selecting relevant indicators, the authors built an integrated cybersecurity index using the Sundarovsky convolution method. Sigma-limited parameterisation and Pareto-optimisation were then used to identify the determinants of the ability to counter financial and cyber fraud, which were used as predictors. Nonlinear regression was applied to determine the dependency of the integrated cybersecurity index on the government efficiency index, the ease of doing business and on the crime indices. On this basis, the authors conducted a bifurcation analysis of the maturity of current global system for combating financial and cyber fraud and produced its phase portraits. It was found to be mature (“Government Efficiency Index – Ease of Doing Business” and “Ease of Doing Business – Crime Index”) and insufficient mature (“Government Efficiency Index – Crime Index”), with the components' imbalance indicating high system's sensitivity to react on changes. The constructed 'Equilibrium States' phase portraits showed non-equilibrium phase portraits of the 'saddle' type. The obtained results made it possible to identify determinants of a global integrated system's instability to combat financial and cyber fraud.

KEYWORDS

financial fraud, cyber fraud, phase portrait, bifurcation analysis.

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