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APEW-Fed: adaptive privacy-aware ensemble weighting for federated anomaly detection in enterprise resource planning
Adiah Qazi1, Ammad Ali Khan Jadoon2, Sadiqa Arshad3
1Department of Information Security, Military College of Signals (MCS), National University of Sciences and Technology (NUST), Rawalpindi, Pakistan. adiaqazi@yahoo.com.
Abstract:
Enterprise Resource Planning (ERP) systems are high-value targets for fraud owing to the sensitive financial and operational data they process. Anomaly detection in such systems faces a fundamental tension: centralising data for accurate detection conflicts with privacy regulations such as the European Union's General Data Protection Regulation (GDPR) and the United States' Sarbanes-Oxley Act (SOX). We present APEW-Fed, a federated ensemble framework that resolves this tension through three provably complementary mechanisms. First, Adaptive Privacy-Aware Ensemble Weighting (APEW) frames model fusion as a privacy-penalised optimisation problem and derives closed-form dynamic weights that up-weight privacy-efficient, high-confidence detectors. Second, Feature-Sensitivity Calibrated Differential Privacy (FS-CDP) partitions features into sensitivity tiers and allocates per-tier Gaussian noise budgets that provably minimise total noise variance subject to a global Rényi DP constraint. Third, Federated Anomaly Score Calibration (FASC) reconciles heterogeneous score distributions across clients via differentially private quantile sketches under secure aggregation. Integrating Isolation Forest, a federated autoencoder trained with per-step DP-SGD, adaptive DBSCAN, and gradient boosting, we evaluate on 243,531 real-world ERP transactions with 5000 expert-annotated anomalies and validate on two public benchmarks: the IEEE-CIS Fraud Detection dataset and the NSL-KDD network intrusion dataset. APEW-Fed achieves 93.5% F1-score at [Formula: see text] RDP-only 2.7 percentage points below the non-private centralised baseline-while reducing communication cost by 94% versus FedAvg. On a strictly unbiased uniform-only evaluation subset (2500 transactions, no score-based enrichment), APEW-Fed achieves 92.1% F1, confirming that the headline result is not an artefact of the annotation sampling design. Membership inference attack success is 51.2%, near-random guessing, confirming strong empirical privacy.