#34 - 15-min test: Are you stuck in firefighting mode?

Last week, I was speaking with a fintech CEO who told me something that made my stomach drop:

"We've been firefighting fraud for two years straight. Every time we think we've got it under control, a new attack comes along and we're back to square one. I'm starting to think this is just how fraud prevention works."

Sound familiar?

Here's the thing: if you're constantly firefighting, you're not managing fraud strategy. You're stumbling over tactics.

But before you can fix the problem, you need to diagnose where you actually are. And that's exactly what I want to help you do today.

Why Most Fraud Teams Misjudge Their Maturity

I've assessed dozens of fintech fraud programs over the years, and there's one pattern I see repeatedly: 

Teams consistently overestimate their strategic maturity.

They'll tell me they have a "fraud strategy" when what they actually have is a collection of tactical responses. 

They'll claim they're "data-driven" when they're actually rule-driven. They'll insist they're "proactive" when they're fundamentally reactive.

This isn't their fault. 

When you're in the thick of fighting fraud every day, it's hard to step back and see the bigger picture. 

But misdiagnosing your maturity level is dangerous, and often it leads to investing in the wrong solutions at the wrong time.

The Vicious Cycle That Keeps You Stuck

Before we dive into the self-assessment, let's acknowledge the trap most teams fall into. I call it the Vicious Cycle of Strategic Neglect, and it looks like this:

Does this pattern sound familiar? 

You notice fraud spiking, so you create a new rule. The rule works for a few weeks, then fraudsters adapt. Fraud spikes again in a slightly different way. You create another rule. And on it goes.

The problem isn't your rules. 

The problem is that you're treating symptoms instead of addressing root causes.

The Three Strategic Decision Domains

Through years of helping fintechs break out of this cycle, I've identified three strategic decision domains that determine whether your efforts will be temporary band-aids or permanent solutions:

1. System Design - How you architect your fraud defenses

2. Orientation - How you organize data and decision-making

3. Operations - How you execute day-to-day fraud management

Here's the key insight: most fraud problems aren't actually fraud problems.

They're gaps in one of these three domains. 

And you can't solve a System Design problem with an Operations solution, just like you can't solve an Orientation problem with better technology.

Let's break down each domain so you can diagnose where your gaps really are.

Domain 1: System Design - The Architecture of Defense

This domain is about how you've structured your fraud prevention architecture. When you have System Design gaps, you'll experience these symptoms:

Primary Symptoms:

• Repeating fraud attacks - The same attack patterns keep working against you

• Underperforming vendors - Your fraud tools aren't delivering the ROI you expected

• Critical blind spots in fraud coverage - You discover major attack vectors you weren't even monitoring

What's Really Happening: Your fraud defenses have fundamental architectural flaws. Maybe you haven't properly mapped your threat landscape. Maybe you're trying to build everything in-house when you should buy, or vice versa. Maybe your defenses aren't layered properly, so when one layer fails, everything fails.

Self-Assessment Questions:

• Have you systematically mapped all the ways fraudsters could attack your business?

• Do you have a clear strategy for what to build vs. what to buy?

• If one of your fraud defenses fails, do others pick up the slack?

• Are you unhappy with your vendor but cannot seem to make a decision about it?

Domain 2: Orientation - The Foundation of Truth

This domain is about how you organize fraud-related data and decision-making across your organization. When you have Orientation gaps, you'll see these symptoms:

Primary Symptoms:

• Cross-team friction - Different teams have different views of fraud performance

• We detect fraud too late - You're always playing catch-up with fraudsters

• Difficulty getting stakeholder buy-in for fraud investments - You struggle to justify fraud prevention spending because ROI isn't clear or shared

• High employee churn - The turnover in your fraud leadership sabotages performance

What's Really Happening: Your fraud program lacks a "source of truth" and aligned objectives. Your fraud team is laser-focused on reducing fraud rates while your finance team is screaming about declining approval rates killing revenue. Different teams are working with different data, different definitions, and completely different priorities. Without shared data and aligned KPIs, fraud patterns get lost and attacks are detected too late.

Self-Assessment Questions:

• Do all stakeholders have the same view of your fraud performance?

• When balancing fraud rates and user experience, are decisions tied to a clear strategy, or do they often require executive escalations?

• Is your fraud-related data consolidated in one place and accessible to all relevant teams?

Side note: This might seem like an easy domain to fix, but my experience shows that many times it is the real culprit. Executives tend to brush off strategic misalignment and blame their teams for poor execution. Be extra honest with your self-assessment here.

Domain 3: Operations - The Execution Engine

This domain is about how you execute day-to-day fraud management. When you have Operations gaps, you'll experience:

Primary Symptoms:

• Low conversion - You're blocking too many good customers

• Bloated fraud budget - Your operational costs are scaling linearly with your business growth

• Heavy reliance on manual review - Your team is constantly pulled into manual investigations instead of strategic work

What's Really Happening: You're stuck in binary thinking: approve or decline, good or bad, manual or automated. You haven't built the operational sophistication to make nuanced risk decisions or implement graduated responses. As your business grows, your operational costs grow proportionally because you haven't decoupled growth from manual processes.

Self-Assessment Questions:

• Do you segment customers by risk level with different treatment for each segment?

• Have you implemented soft controls (spending limits, dynamic 2FA, etc.) as alternatives to hard blocks?

• Can your fraud operations scale without proportional increases in headcount?

The Strategic Gaps Self-Diagnostic

Go back to the self-assessment questions in each domain section. If you answered "no" to most questions in one domain, that's your priority.

Most teams have gaps in multiple domains, but focus on one first. Trying to fix everything at the same time leads back to firefighting mode.

Remember: these domains are building blocks. If you have problems in both System Design and Operations, start with System Design. You can't optimize operations on top of fundamentally flawed architecture. Always get your basics right before moving to the next domain.

Your Next Strategic Investments

Based on your primary domain gap:

If System Design is your biggest gap:

1. Threat Mapping - Start with comprehensive mapping of your attack surface and vulnerabilities. Include future business plans.

2. Build vs. Buy Strategy - Only invest internal resources in main attack vectors where you have unique advantages (your data, your user flows).

If Orientation is your biggest gap:

1. Source of Truth - Consolidate all fraud-related data in one place, validate it, and make it accessible to all stakeholders.

2. Clear Reporting - Enable strategic decisions by analyzing and proposing multiple strategies (low/medium/high risk approaches).

If Operations is your biggest gap:

1. Risk-Based Segmentation - Start simple experiments to segment your population into three risk levels, each with its own decision flow.

2. Soft Controls - Introduce spending limits, dynamic 2FA, merchant reserves, etc. to break the binary approve/decline paradigm.

Breaking the Cycle

Here's what I want you to remember: strategic frameworks address root causes, while tactical fixes only treat recurring symptoms.

Most fraud prevention failures happen because teams try to solve the wrong type of problem. 

A System Design problem can't be solved with better Operations. An Orientation problem can't be solved with better technology.

Are you ready to break free from this cycle?

Take 15 minutes right now to honestly assess which domain represents your biggest gap. Then pick one recommended action for that domain and commit to making progress this quarter.

Which domain did you identify as your biggest gap? Hit reply and let me know. I'm genuinely curious how this framework lands with real fraud teams in the trenches.

In the meantime, that’s all for this week.

See you next Saturday.

P.S. If you feel like you're running out of time and need some expert advice with getting your fraud strategy on track, here's how I can help you:

Free Discovery Call - Unsure where to start or have a specific need? Schedule a 15-min call with me to assess if and how I can be of value.
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Consultation Call - Need expert advice on fraud? Meet with me for a 1-hour consultation call to gain the clarity you need. Guaranteed.
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