Network analytics: more than pretty pictures

August 14, 2014

Methods, Research, Tech Insight

Network analysis is a rapidly growing analytics domain propelled by the explosion of interest in social networking. The methods rest upon much older foundations in the realms of statistics and social science. Euler’s graph theory was proposed in the early 18th century and Moreno established the foundations for social network analysis (SNA) in the 1930’s.

network visualization

One of the exciting aspects of network analysis is the ability to generate elaborate and insightful visualizations. Indeed this can be a valuable tool for discovery and pattern identification. Open source social network analysis tools such as Gephi and commercial tools from SAS and SAP are available to guide inquiries.

As an example, working with Gephi, I downloaded and generated a detailed visualization of pre-collapse Enron “to-and-from” email patterns. Inside Gephi, the visualization is interactive, allowing drill-down and zoom-out navigation to examine particular clusters and other structures associated with organizational communication patterns (see Figure 1). This ability can be quite useful toward identifying key players in a discovery initiative or forensics investigation – quickly identifying who to interview and where to seek additional information.

Graph Visualization

Figure 1: Enron email exchange network visualized in Gephi

However, going back to the roots of network analysis in mathematics and sociology, there are also formal statistical measures available from network structures.  A key message is that network analytics is more than fancy visualization.  Graph mathematics and social network analysis (SNA) provide insightful statistical measures of networks.  Resulting measures can supplement and enhance visualizations. As well, statistical measures can be used as formal components in data analytics and machine learning approaches.

For example, in the above network representation of Enron email exchanges, standard quantitative statistical measures can be derived, for instance:

  • centrality (identification of the level of relative importance of key nodes),
  • density (how ‘tight’ the network is overall),
  • modularity (degree to which network is separated in clusters),
  • bridge (nodes which occupy shortest or only route connecting parts of network), and
  • propinquity (measure of tendency of similar or co-located nodes to link).

In another example, in a fraud investigation, fraud risk can be more heavily weighted when co-participants in a network (in aggregate) all have high risk scores. In other words, a ‘transaction chain’ involving several participants can be flagged for potential fraud based on an aggregate score involving all participants in the chain. As well, particular transaction patterns can be identified as suspicious based on a ‘library’ of fraud transaction patterns. As an example, cross-border carousel tax fraud can be described as a specific network pattern and flagged when detected in a large dataset of transactions (see Figure 2).
5

Figure 2: Representation of a cross-border tax fraud pattern as a network chain

By the same account, statistical measures can be helpful to delve into ‘deep structure’ – to identify factors and patterns not apparent to the naked eye. As an example, ‘hidden’ but influential participants in a network can be detected via standard statistical graph measures such as eigenvector centrality.

In summary, network analysis goes beyond compelling visualizations. There are a rich set of statistical measures to be gleaned from graph statistics and social network analysis methods.

Here are some resources for those interested to learn more:

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About SARK7

Scott Allen Mongeau (SARK7) is an INFORMS Certified Analytics Professional (CAP) and a Data Scientist in the Cybersecurity business unit at SAS Institute. Scott has over 20 years of experience in project-focused analytics functions in a range of industries, including IT, biotech, pharma, materials, insurance, law enforcement, financial services, and start-ups. Scott is a part-time PhD (ABD) researcher at Nyenrode Business University. He holds a Global Executive MBA (OneMBA) and Masters in Financial Management from Erasmus Rotterdam School of Management (RSM). He has a Certificate in Finance from University of California at Berkeley Extension, a MA in Communication from the University of Texas at Austin, and a Graduate Degree (GD) in Applied Information Systems Management from the Royal Melbourne Institute of Technology (RMIT). He holds a BPhil from Miami University of Ohio. Having lived and worked in a number of countries, Scott is a dual American (native) and Dutch citizen. He may be contacted at: webmaster@sark7.com All posts are copyright © 2015 SARK7 All external materials utilized imply no ownership rights and are presented purely for educational purposes.

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