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Combating fraud is a big challenge for many companies, but a battle they must undertake as part of their risk management strategy. One weapon to consider for the arsenal: analytics software.

Software applications that analyze trends and behavior online can help organizations detect and prevent fraud. More organizations are turning to the technology as it becomes increasingly effective in tracking suspicious behavior.

Most large financial institutions use some aspect of fraud-detection tools , says Rodney Nelsestuen, s enior analyst, financial strategies and IT investments at Tower Group. “Every card company is using them today. Money changers and other less-regulated companies are starting to put these [products] in.”

Nelsestuen says analytics software products continue to improve in their ability to identify patterns that indicate fraud. But he notes that technology is only part of the solution. Fraud management includes “people, processes and technology, so there is never going to be a point in time where technology is going to win the day by itself.”

Educating employees and customers about fraud is critical, as is building internal controls, Nelsestuen says. And as analytics software advances in capability, it will become increasingly important in helping to detect fraud and preventing it from happening, he says.

Vendors offer a variety of analytics products. IBM provides a portfolio of analytics software designed to help organizations improve detection and prevent fraud. IBM Entity Analytics Solutions (EAS) 4.1 enables companies to quickly analyze and compare data stored across multiple information resources, to identify instances of fraud and abuse.

IBM says the software uses patented “Entity Resolution” technology to determine identities, to discern nonobvious relationships between identities — such as shared phone numbers, addresses or bank accounts — and to share this data without compromising the privacy of the information.

EAS 4.1 is designed to help retail, health-care and insurance companies detect malicious internal and external fraud and collusion while also allowing banks and insurance companies to deploy sophisticated customer relationship systems that can root out money-laundering schemes that use false or fraudulent IDs.

Another vendor, SPSS Inc., offers tools such as predictive analytics software to help organizations combat fraud, waste and abuse. The company’s products use advanced statistical and data mining techniques to detect patterns and anomalies and generate predictive models that identify suspicious activities.

SPSS says the applications use open architectures that interact with a variety of data sources, so users can access any type of data and deliver predictions and recommendations to decision makers to minimize the impact of fraud. One example of a product, PredictiveClaims, helps insurance companies detect and prevent fraud. Another, Clementine, is a data mining solution that enables organizations to develop and deploy predictive data mining models that uncover patterns in data to detect fraud.

Also offering software to fight fraud is ACL Services , which provides a suite of products called ACL Business Assurance Analytics. The products help organizations detect and prevent fraud based on comprehensive analysis of the transactional data flowing through financial and operational systems, such as enterprise resource management, customer relationship management and other enterprise applications.

Through continuous monitoring, the software allows organizations to test and validate data from virtually any enterprise application, the company says, with automatic notification when fraud indicators are detected.

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