Risk management has always been highlighted as a key component to a successful business – however, as risks change and evolve, organisations can often be left vulnerable. Using outdated technology can have disastrous affects on a company, but continuously having to update it can cripple a company’s budget.
The days of simple risk management are gone. Fraudsters are becoming smarter and smarter each day, meaning businesses must do so much more to ensure security and compliance.
Amid other problems, such as the rise of faceless banking and the cost of living crisis, a one size fits all approach is no longer viable. Taking care with verification, awareness and technical investment are just some of the things that organisations must prioritise to ensure there are no chinks in their armour.
Simply managing risk is not enough and, as its complexity takes on orchestral heights, businesses must do more. Cue risk orchestration.
Understanding the next evolutionary step in risk management, Francis Bignell, a journalist at The Fintech Times, sat down with Chris Foye, senior director of platforms at LexisNexis Risk Solutions to fully understand what risk orchestration is. The webinar went on to uncover why risk orchestration is so impactful, why fintechs are so primed for it and how they can start implementing it.
What is risk orchestration?
Establishing what risk orchestration is was the first topic of conversation. Through the LexisNexis Risk Solutions’ RiskNarrative platform, organisations are able to change their process to risk management on a case dependent situation – be it checking a device’s fraudulent behaviour, identity verification checks and more, while ultimately being able to manage all the different necessary checks that need to happen in one place. “Risk orchestration is about intelligently coordinating those different things while complying with an organisation’s risk appetite and risk based approach.”
Trends in the risk management world
Having established what risk orchestration was, Foye reflected on some of the latest trends seen in the sector over the last year and how they have impacted risk management, and in turn, risk orchestration. Regulations, sanctions, labour costs and fraud were all topics that arose. Focusing on the last one, Foye explained that despite fraud generally having decreased post pandemic, it was not something that could simply be swept under the carpet.
“What we’re seeing from our analysis, in terms of cybersecurity, is bot attacks have increased. There has also interestingly been an increase in password reset attacks – the precursor to account takeover.”
Having to juggle fraud, regulations, labour costs and trying to grow your business all at the same time can be challenging. Organisations have resorted to going digital to try and tackle these challenges, but in doing so, create a completely new challenge for themselves in the shape of customer expectation.
“A lot of organisations are not joining up these processes making it hard for them to automate them. That means people are looking at cases that would normally just be passed because there’s no real risk around them – they’re tied up in those sort of cases.” Risk orchestration removes this barrier meaning resources can be reallocated to where they’re needed.
Importance of streamlining risk
The conversation moved on to why risk orchestration was the next logical step for organisations, especially fintechs, to take when approaching the issue of risk management.
“The digital world is a highly competitive market, making it very easy for customers to find alternatives as they’re only one click away.” Onboarding and retention are crucial for an organisation, and though companies can say they’ve made steps into the digital world, that is not to say they can’t do more.
This becomes especially apparent when they must respond to regulations and policies. Having an outdated system means a slow response to change, which can see customers look for an alternative if they’re not instantly compliant.
Why are fintechs so primed?
Foye reviewed the purpose of fintechs and why risk orchestration is so appropriate for them: “Fintechs were positively disruptive: they looked at the market and thought how can we be unique and how can we ensure customer adoption in a certain market? Providing good customer experience is key.”
Legacy infrastructure can hold back incumbents, but fintechs don’t have this issue, making it that much easier to implement risk orchestration. Not every fintech specialises in KYC, by implementing orchestration tech, they give themselves a platform to carry out their services while remaining compliant.
By using a platform like RiskNarrative, fintechs can rest assured that they will have a platform that grows with them.
Too much too soon?
When asked about the appropriate size a company should be to consider orchestrating risk, Foye explained there was no singular right answer. Customers may have a straight forward requirement or something more complex. The beauty of risk orchestration is that it is applicable in all situations.
“We understand businesses are in different places. This means you don’t need to take every capability on from day one,” said Foye.
“As they grow they can easily extend the service. They may start with identity verification, and then expand to screening or document authentication. The key thing is once they’re on the platform, they can have reassurance that they can access other capabilities as and when they need it. The business can be relatively small but so long as they have an idea of their risk appetite, they will be able to make the most of risk orchestration.”
Time to start orchestrating risk
The webinar rounded out with the duo discussing when it was time to start orchestrating risk. In a customer driven world, Foye highlighted the importance of customer satisfaction.
“The common signs we see its time to start orchestrating risk are when organisations are unhappy with the level of customer friction that they’re seeing through metrics such as abandonment rates. Demanding internal workloads are also a good indicator it is time to implement risk orchestration.”
Speed was also highlighted as key factor for wanting to implement the technology. Foye established that, historically, compliance and speed have not always complimented each other. However, this was now an issue of the past due to automation.