Future of Sourcing - Fraud https://futureofsourcing.com/tags/fraud en What Keeps Money Launderers Up at Night? https://futureofsourcing.com/what-keeps-money-launderers-up-at-night <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Suspicious%20Activity%20Reports%20%281%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Suspicious%20Activity%20Reports%20%281%29.png" title="Suspicious Activity Reports" class="colorbox" rel="gallery-node-1841-E4lRRVLbX8E"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Suspicious%20Activity%20Reports%20%281%29.png?itok=9GDV569t" width="624" height="325" alt="Suspicious Activity Reports" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/rethinking-the-future-for-resilient-sourcing-and-beyond">Rethinking the Future for Resilient Sourcing and Beyond</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>If you&rsquo;re laundering money or financing terrorism, what keeps you up at night?</p> <p>Beyond the day-to-day intrigues of a life of crime, you have a money trail to worry about. Sure, you fear the sophisticated law enforcement and intelligence agencies with the power to track you, shut you down, and put you behind bars. But what about the thousands of watchful eyes observing your money as it flows through banks, casinos, real estate and other covert financial conduits?</p> <h1>How Financial Crimes are Identified</h1> <p>Some of those eyes belong to trained bank employees -- BSA and AML analysts, Financial Crimes Investigators, Compliance Officers, and many others. These employees are tasked with enforcing regulations meant to prevent exactly what you&rsquo;re doing. Still, those individuals only investigate cases that have been discovered, so you and your fellow criminals rely on the surveillance that&rsquo;s meant to find you to be unsophisticated, burdensome, and technologically behind.</p> <p>Prosecution for a financial crime can come at you from several directions. It&rsquo;s certainly true that many important cases develop from whistleblowers and informants, undercover operations, and referrals from other domestic and foreign law enforcement agencies.</p> <p>But far and away, the most fruitful investigative sources are the banks and other businesses that have a detailed view of financial transactions, and which submit Suspicious Activity Reports (SARs) and other forms to report potential financial crime. Financial investigations begin with these reports, and end with convictions and the shutting down of networks.</p> <h1>Surveillance of the Crime</h1> <p>Law enforcement, intelligence agencies and others rely on reporting entities to conduct effective surveillance for financial crime and produce high-quality reports. Criminals and terrorists rely on them to fail.</p> <p>&lsquo;Surveillance&rsquo; sounds easy, doesn&rsquo;t it? Cops on TV&nbsp;do it all the time. It seems almost exciting. Banks see all the transactions, so creating and maintaining a system to flag suspicious activity should be pretty straightforward.</p> <p>But of course, it isn&rsquo;t. The problem isn&rsquo;t simply sharpening your methods until they find every illicit activity hiding among those transactions you thought were harmless (in AML parlance, a &lsquo;false negative&rsquo;). Instead, the more significant problem is handling the mountain of alerts generated when you turn a hyper-sensitive process like that loose on the millions of transactions a bank typically handles each month (the &lsquo;false positives.&rsquo;)</p> <p>Every one of the false positive alerts has to be painstakingly investigated and cleared. The more thorough and exacting your AML process is, the more of them you generate.</p> <p>And, on top of the normal caseload, consider how the current global pandemic has created an even greater backlog for banks -- both with stimulus payment programs that generate alerts and by disrupting the normal operations banks use to deal with them.</p> <h1>The Role of Artificial Intelligence</h1> <p>You can see how Artificial Intelligence (AI) and other forms of technology are quickly becoming very compelling. Properly used, AI applies advanced logic consistently to spot hidden transactions and reduce false positives &ndash; more wheat, less chaff.</p> <p>Just as important as AI learns on the job, it also learns quickly. As analysts review the output from AI, and either validate or reject it, that feedback becomes critical inputs in the AI model. This is part of its continuing education, as it were -- and it rapidly adjusts its triggers and thresholds accordingly.</p> <p>In doing so, AI integrates the best of both worlds, marrying technology&rsquo;s ability to deploy complex logic across large sets of data rapidly and effectively, with human judgment and the ability to make decisions in situations lacking full clarity.</p> <h1>Suspicious Activity Reporting</h1> <p>This doesn&rsquo;t just improve the alert-generation stage, but also the investigative process. SARs are the primary means of passing information to law enforcement, and the quality of that reporting is critical.</p> <p>AI allows the analyst to bring multiple sources of data to bear -- on the client, the counterparty, and the account&rsquo;s transaction history -- so that the decision to file a SAR is fully supported by the evidence, not just a single red flag.</p> <p>It also dramatically reduces the time taken to produce the SAR and ensures that the report is more detailed and thorough, giving the investigator a better head-start on the investigation.</p> <p>AI is more than just a pathway for financial institutions to become more efficient, better manage risk, and effectively utilize the use of resources. By enhancing the quality and frequency of reporting to national Financial Intelligence Units and law enforcement, the global effort to combat terrorism financing, money laundering, and the underlying crimes they fund is more effective</p> <p>And it guarantees nothing but sleepless nights for criminals trying to exploit the financial system.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/suspicious-activity-reports-sars" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Suspicious Activity Reports (SARs)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/money-launderering" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Money Launderering</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/fraud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fraud</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/financial-crime" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">financial crime</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="What Keeps Money Launderers Up at Night? - Future of Sourcing" addthis:url="https://futureofsourcing.com/what-keeps-money-launderers-up-at-night"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 01 Sep 2020 16:58:03 +0000 John O’Neill 1841 at https://futureofsourcing.com https://futureofsourcing.com/what-keeps-money-launderers-up-at-night#comments Innovations in Third Party Management: DBS Bank Ltd https://futureofsourcing.com/innovations-in-third-party-management-dbs-bank-ltd <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Third%20Party%20Managemnent_1.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Third%20Party%20Managemnent_1.png" title="Innovations in Third Party Management: DBS Bank Ltd" class="colorbox" rel="gallery-node-1588-E4lRRVLbX8E"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Header%20Image_Innovations%20in%20Third%20Party%20Managemnent_1.png?itok=tcn_x1yG" width="624" height="325" alt="Innovations in Third Party Management: DBS Bank Ltd" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p>This October, the&nbsp;<a href="https://futureofsourcingawards.com/?__hstc=215510152.344406f4865c40604cf6029be7e958e0.1543422516683.1569422747581.1569427810662.603&amp;__hssc=215510152.11.1569427810662&amp;__hsfp=3079266627" target="_blank">Future of Sourcing Awards</a>&nbsp;will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations. Procurement fraud is one of the most common frauds across industries. Read how DBS Bank Ltd created rulesets for automation of transaction surveillance so that monitoring of transactions could be carried out more efficiently and regularly.</p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <h3><em>Can you outline why your team embarked on this project and the problem that needed to be solved?</em></h3> </div> <div>According to PwC&rsquo;s Global Economic Crime and Fraud Survey in 2018, procurement fraud is one of the most common frauds across industries. As such, DBS Group Procurement &amp; Services (GPS) recognizes the need for constant vigilance and the importance of enterprise wide anti-fraud controls. Year after year, we challenge ourselves to revisit and enhance our anti-fraud controls. With the migration to our new Procure-To-Pay system (P2P) completed in 2018, spend management is on the uptrend and more procurement transactions are now electronically captured through P2P. As our procurement data accumulates, we started to analyze them for anomalies, albeit manually. This led to the creation of rulesets for automation of transaction surveillance so that monitoring of transactions can be carried out more regularly. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div>In the past, our procurement operations team spent 170-man hours (or about 0.1 Full-Time Equivalent) monitoring transactions using spreadsheets, scrutinizing anomalies to prevent purchase order splitting and creating a variety of reports for management and stakeholders&rsquo; review. Through the automation of transaction surveillance, we are now able to achieve 81% reduction of employee toil and to redeploy manpower to new projects.&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>How were things done originally and what was the inspiration to innovate the process?</em></h3> </div> <div>We realized that staff may not be fully aware of the requirements of the Group Procurement Policy, Standard and the procurement process which resulted in the following challenges:&nbsp;</div> <div>&nbsp;</div> <div>a.) No contracts signed for procured goods and services&nbsp;</div> <div>b.) Maverick spend (non-PO backed invoices or outside of P2P &ndash; no spend control)&nbsp;</div> <div>c.) Same staff sourcing and approving&nbsp;</div> <div>&nbsp;</div> <div>To compound on these problems, there were two additional challenges: (i) in the invoicing or payment phases, duplicated invoices detection was not systematic; (ii) there were risks of data input errors in the P2P. &nbsp;</div> <div>&nbsp;</div> <div>Embracing DBS&rsquo; digital and sustainable culture; and with the blessing of our Regional Head of Procurement (Donna Trowbridge), we decided to build this capability internally ourselves. GPS Risk Team got excited and attended trainings and self learnt Qlikview, PowerBI, R &amp; Python. We selected Python due to its flexibility and portability. As we gained success and momentum in the use Python, we provided showcases in our Agile sprints to key stakeholders. These drew interests in our capability which we can deploy to other use cases such as automation of key processing areas. &nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?) </em></h3> </div> <div>i.) Through time and motion study on employee toil, we measured staff productivity (employee hours) saves. &nbsp;</div> <div>ii.) Through performing regular user surveys (3 x &lsquo;U&rsquo;s: Useful, Usable and Used), we sought to enhance the employee journey and experience &nbsp;</div> <div>&nbsp;</div> <div> <h3><em>How you plan to ensure that the new model remains relevant and adapts to the future needs of the market?</em></h3> </div> <div>In partnership with our Group Compliance control function, we keep close tabs with the latest fraud trends globally. We will continuously add on and refine the rules into our data model. Future roadmap covers the expansion to include account payable and expense data. Over time, we will correlate the procurement end to end data to more effectively surface outliers for Case Management with stakeholders. Through such outreach efforts, we progressively educate our internal procurement users and continuously seek opportunities to reduce our fraud risk exposure.&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What advice do you have for those who may want to implement this innovative approach in their own organizations?</em></h3> </div> <div>i.) &nbsp; Be data &ndash; driven. Adopt the 4A approach for data management: Ask -&gt; Acquire -&gt; Analyze -&gt; Act &nbsp;</div> <div>ii.) &nbsp;Be bold to experiment, make mistakes, iterate/pivot&nbsp;</div> <div>iii.) Engage your stakeholders in this employee journey as early as possible (listen and incorporate their feedback)&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>How did your team assess the risks/potential for your third party management strategy?</em></h3> </div> <div>Several options were evaluated for transactions surveillance:&nbsp;</div> <div>&nbsp;</div> <div><strong>Option A</strong>: Partnering with DBS Technology Support unit to build in-house &ndash; this process helped clarify our requirements but was going to cost us several hundreds of thousands SGD to build a platform from scratch to meet 100% of our specifications&nbsp;</div> <div><strong>Option B</strong>: Looking outwards to buy an established procurement analytics tool (Tool A) from a market leader &ndash;this tool can meet 50% of our requirements but will cost us almost double of Option A&nbsp;</div> <div>Option C: Exploring adding a module to our existing P2P system &ndash; which was cheaper than Option A &amp; B but was only able to meet 10-20% of our requirements &nbsp;</div> <div><strong>Option D</strong>: Do-It-Ourselves (DIO) &amp; building our own procurement analytics capability&ndash; using available open-source analytic tool to build rulesets to identify outlying procurement transactions and trigger notifications to procurement users and approvers and work with them on remediations (Case Management)&nbsp;</div> <div>&nbsp;</div> <div><img alt="" src="https://futureofsourcing.com/sites/default/files/DBS%20Bank%20LTD_Table.png" /></div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/fraud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fraud</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/third-party-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Third Party Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procure-to-pay-p2p-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procure-To-Pay (P2P)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/spend-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Spend Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Innovations in Third Party Management: DBS Bank Ltd - Future of Sourcing" addthis:url="https://futureofsourcing.com/innovations-in-third-party-management-dbs-bank-ltd"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 12 Aug 2019 19:18:53 +0000 Future of Sourcing Awards 1588 at https://futureofsourcing.com https://futureofsourcing.com/innovations-in-third-party-management-dbs-bank-ltd#comments Blockchain...The Answer to the Financial Service Industry's Prayers? https://futureofsourcing.com/blockchain-the-answer-to-the-financial-service-industrys-prayers <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Blockchain%20Frost%20624.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Blockchain%20Frost%20624.jpg" title="Blockchain...The Answer to the Financial Service Industry&#039;s Prayers?" class="colorbox" rel="gallery-node-1172-E4lRRVLbX8E"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Blockchain%20Frost%20624.jpg?itok=UBpr6H5X" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Since the financial crisis of 2008, the financial services industry has been inundated with new rules and regulations that have consumed resources and increased spend on compliance. All of this is occurring at a time when the industry has also been under increasing competition from financial technology (fintech) firms. Whilst the fintech industry is booming by providing new innovative products at a rapid pace, traditional incumbents have appeared less agile at adopting these. It is worth noting that these same disruptive technologies can also be used to the advantage of the financial services industry. &ldquo;RegTech&rdquo; refers to clever, disruptive, technology that will service (and no doubt revolutionise) the regulatory sector. This type of technology will continue to flood the market over the next few years but how will firms use it? Will they embrace it? Will they feel held back by the unknown? Or will they see the benefits of it and outsource these functions to third-party experts?&nbsp;</p> <p>Blockchain, a critical fintech innovation, appears to be on every conference and panel debate and is slowly creeping in to boardroom discussions. Blockchain has moved on from simply being the technology used for cryptocurrencies into other areas such as the movement of information and identity, the movement of commodities and securities and the digital execution of contracts. The world of blockchain has moved forward at an incredible speed; but what exactly is it?&nbsp;</p> <p>To put things simply, blockchain is a type of Distributed Ledger Technology (DLT). DLT is a system of digital data that is duplicated, shared and synchronised across multiple locations. Whilst a type of DLT, blockchain uses unchangeable, encrypted, packages of data stored in a connected chain as the ledger of data. Here, each new piece of data is verified by all locations and is then added to the existing chain of previous data making it virtually impossible to defraud. It thus provides users with a trustworthy source of information.&nbsp;</p> <p>Complying with regulators is becoming a larger burden than ever before. Using blockchain can help ease these pressures and will, no doubt, play an important role in the Know Your Customer (KYC) and Anti-Money Laundering (AML) processes of the future.&nbsp;</p> <p>Blockchain has the ability to inexpensively verify an individual&rsquo;s identity in a time-efficient manner. Today, KYC tasks are repetitive in nature which result in data inconsistencies, mistakes and a duplication of processes. These tasks are often carried out using a number of different systems, both internal and external, which inevitably lead to the implementation of manual solutions with the purpose of bridging end-to-end operational procedures. AML compliance also requires extensive documentation requests and verification, as well as proof of identity. All together, these outdated processes are not only highly frustrating but also create an environment prone to many risks. These processes can take days, weeks, or even months in some jurisdictions, to fulfil and satisfy the regulators&rsquo; requirements. As a result, the cost of being compliant is escalating rapidly as financial institutions try to stay ahead of terrorists and fraudsters.&nbsp;</p> <p>The use of a shared ledger is of most importance here. With this, the processes can be monitored and adjusted in a more efficient way than they currently are. Due to the shared nature of the ledger, a comprehensive database of client activity and background information would be available to all on the network. This would mean that any changes to this information would be communicated and updated in real time; making it much more likely to detect a potential scam or fraudulent transaction. Giving all departments access to a shared ledger would give them all the client background information and account activity that would result in a seamless stream of knowledge and make the KYC process as efficient as possible.&nbsp;</p> <p>Another luring aspect of blockchain from a compliance perspective is its practical immutability. As soon as data is input and saved into the ledger it can never be changed or deleted. For this reason alone, blockchain has been used as the document of proof for the transferring of digital assets; and by the same token can lend itself to the application of proof-of-process for compliance. The shared ledger can be used to keep track of the many steps required by the regulators. By recording actions and their outputs, an audit trail for regulators to verify compliance would have been created. Due to the immutability of the records there would be no reason to dispute them at any point.&nbsp;</p> <p>Navigating the ever-changing plethora of regulatory rules and obligations is challenging and costly. Several of the new regulations now require structured, well-defined and complete risk data reporting which places extra strain on those being regulated. These strains are exacerbated since there is still a heavy reliance on manual processes and archaic partially automated processes. On the other side of the coin, some regulators receiving these mandatory datasets are ill-equipped to manage them, impacting their ability to provide effective data analysis, surveillance and a timely and effective review process.&nbsp;</p> <p>Using blockchain for regulatory reporting, could take away several pain points for both the financial institutions and the regulators. Since the data is shared by design, regulators would not have to collect, store, reconcile and aggregate the information for themselves. All transactions are documented immutably on the distributed ledger providing a comprehensive, secure, precise, irreversible and permanent audit trail. Introducing one shared platform would remove the requirement for each to hold its own replicated records. It could also mean the records would be updated in real time. A blockchain could vastly improve the speed and quality of any regulatory review process since there would no longer be a need for reconciliation.&nbsp;</p> <p>Financial firms would benefit from a more efficient regulatory reporting process since the distributed ledger would act as both an execution platform and a mechanism to store transactional information. The use of blockchain would significantly improve their ability to resolve compliance issues, react to new regulatory and compliance obligations and address internal audit requirements in a timely and cost-effective manner; as well as improve the quality, accuracy and confidence of and in the process.&nbsp;</p> <p>Global reporting and compliance on blockchain will not be adopted overnight. Setting up and managing an infrastructure to support these kinds of solutions takes time and can prove to be disruptive. However, the technology has an overwhelming potential to revolutionise and improve many of the processes within financial services, particularly those that are regulated. Populating a database is all well and good and certainly a first step, but using the algorithms to extract data, check and update it, analyse and communicate it efficiently requires all-important expert know-how. A trusted service provider can not only set up the shared ledger facility but also manage it to ensure that all regions communicate with one and other by sharing the same analysed information. As a relatively new system, particularly in relation to KYC and financial crime prevention, it is yet to be seen how regulators will adapt and embrace the possibilities before the industry-wide benefits can be really felt&hellip; but there is no denying how beneficial these can and will be</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/distributed-ledger-technology-dlt" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Distributed Ledger Technology (DLT)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/anti-money-laundering-aml" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Anti-Money Laundering (AML)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/fraud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fraud</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/data-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Blockchain...The Answer to the Financial Service Industry&#039;s Prayers? - Future of Sourcing" addthis:url="https://futureofsourcing.com/blockchain-the-answer-to-the-financial-service-industrys-prayers"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 14 May 2018 21:14:39 +0000 Andrew Frost 1172 at https://futureofsourcing.com https://futureofsourcing.com/blockchain-the-answer-to-the-financial-service-industrys-prayers#comments Staying a Step Ahead of Contact Center Fraud https://futureofsourcing.com/staying-a-step-ahead-of-contact-center-fraud <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/fraudsters%20624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/fraudsters%20624x325.jpg" title="Turning to a third party to handle customer calls may lower costs and drive new efficiencies, it has its fair share of risks." class="colorbox" rel="gallery-node-1166-E4lRRVLbX8E"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/fraudsters%20624x325.jpg?itok=gUOGFFn-" width="624" height="325" alt="Turning to a third party to handle customer calls may lower costs and drive new efficiencies, it has its fair share of risks." title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div style="clear:both;"> <p paraeid="{e4e840c6-a5ac-4533-928f-8b72ccbe9d3e}{169}" paraid="1370199847"><span xml:lang="EN-US">Customer service&nbsp;</span><span xml:lang="EN-US">is</span><span xml:lang="EN-US">&nbsp;one of the most frequently outsourced business functions, with</span>&nbsp;<span xml:lang="EN-US">outsourced contact centers accounting for approximately&nbsp;</span><a href="https://www2.everestgrp.com/Files/previews/Everest%20Group%20-%20CCO%20AR%202017%20-%20PD.pdf" rel="noreferrer" target="_blank"><span xml:lang="EN-US">25 percent</span></a><span xml:lang="EN-US">&nbsp;of the global contact center market. While turning to a third</span>&nbsp;<span xml:lang="EN-US">party to handle&nbsp;</span><span xml:lang="EN-US">customer&nbsp;</span><span xml:lang="EN-US">calls</span>&nbsp;<span xml:lang="EN-US">may&nbsp;</span><span xml:lang="EN-US">lower costs and&nbsp;</span><span xml:lang="EN-US">drive&nbsp;</span><span xml:lang="EN-US">new efficiencies</span><span xml:lang="EN-US">, it has its fair share of risks</span><span xml:lang="EN-US">.</span></p> </div> <div style="clear:both;"> <p paraeid="{e4e840c6-a5ac-4533-928f-8b72ccbe9d3e}{208}" paraid="1053988313"><span xml:lang="EN-US">Whether they are outsourced, offshored, nearshored or&nbsp;</span><span xml:lang="EN-US">using</span><span xml:lang="EN-US">&nbsp;remote workers, contact centers are natural targets for&nbsp;</span><span xml:lang="EN-US">fraud. The sheer amount of sensitive data they handle, store and process is tantalizing for any cybercriminal looking to&nbsp;</span><span xml:lang="EN-US">steal</span><span xml:lang="EN-US">&nbsp;credit card numbers, social security numbers</span><span xml:lang="EN-US">, birthdates, addresses</span><span xml:lang="EN-US">&nbsp;and other Personally Identifiable Information (PII).&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{e4e840c6-a5ac-4533-928f-8b72ccbe9d3e}{228}" paraid="775064715"><span xml:lang="EN-US">At the same time,&nbsp;</span><span xml:lang="EN-US">poor outsourcing decisions account for&nbsp;</span><a href="https://www.computerweekly.com/news/2240178104/Bad-outsourcing-decisions-cause-63-of-data-breaches" rel="noreferrer" target="_blank"><span xml:lang="EN-US">63 percent</span></a><span xml:lang="EN-US">&nbsp;of data breaches</span><span xml:lang="EN-US">&nbsp;across industries</span><span xml:lang="EN-US">,&nbsp;</span><span xml:lang="EN-US">elevating&nbsp;</span><span xml:lang="EN-US">the potential threats</span><span xml:lang="EN-US">&nbsp;within these customer interaction hubs.</span>&nbsp;<span xml:lang="EN-US">The result is a&nbsp;</span><span xml:lang="EN-US">perfect storm for contact center fraud</span><span xml:lang="EN-US">. And</span><span xml:lang="EN-US">&nbsp;in an age&nbsp;</span><span xml:lang="EN-US">when a single data breach&nbsp;</span><span xml:lang="EN-US">can&nbsp;</span><a href="https://www.ibm.com/security/data-breach" rel="noreferrer" target="_blank"><span xml:lang="EN-US">cost</span><span xml:lang="EN-US">&nbsp;millions of dollars</span></a><span xml:lang="EN-US">, ruin&nbsp;</span><span xml:lang="EN-US">a&nbsp;</span><span xml:lang="EN-US">brand&rsquo;s reputation and&nbsp;</span><span xml:lang="EN-US">damage&nbsp;</span><span xml:lang="EN-US">customer trust, contact centers must</span><span xml:lang="EN-US">&nbsp;continually work to</span><span xml:lang="EN-US">&nbsp;stay&nbsp;</span><span xml:lang="EN-US">a</span><span xml:lang="EN-US">&nbsp;step ahead of fraudsters &ndash; no ma</span><span xml:lang="EN-US">tter</span><span xml:lang="EN-US">&nbsp;how many security controls they have in place</span>&nbsp;<span xml:lang="EN-US">or&nbsp;</span><span xml:lang="EN-US">how well they&rsquo;ve&nbsp;</span><span xml:lang="EN-US">vetted and trained</span><span xml:lang="EN-US">&nbsp;their staff.</span>&nbsp;&nbsp;</p> </div> <div style="clear:both;"> <p paraeid="{2b1ceb12-71c6-429e-a328-16133803347a}{49}" paraid="5800160"><span xml:lang="EN-US">However, such fraudulent individuals aren&rsquo;t necessarily cybercriminals on the FBI&rsquo;s &ldquo;Most Wanted&rdquo; list</span><span xml:lang="EN-US">. F</span><span xml:lang="EN-US">raudsters come in all&nbsp;</span><span xml:lang="EN-US">shapes and sizes,&nbsp;</span><span xml:lang="EN-US">with a multitude of motives,&nbsp;</span><span xml:lang="EN-US">making it more difficult to prevent or deter an incident.</span>&nbsp;<span xml:lang="EN-US">Based on our&nbsp;</span><span xml:lang="EN-US">experience of helping and advising on contact center security,&nbsp;</span><span xml:lang="EN-US">h</span><span xml:lang="EN-US">ere are&nbsp;</span><span xml:lang="EN-US">five</span><span xml:lang="EN-US">&nbsp;often-overlooked</span><span xml:lang="EN-US">&nbsp;types</span><span xml:lang="EN-US">&nbsp;of fraudsters&nbsp;</span><span xml:lang="EN-US">we think&nbsp;</span><span xml:lang="EN-US">every contact center should&nbsp;</span><span xml:lang="EN-US">be aware of</span><span xml:lang="EN-US">:</span></p> </div> <div style="clear:both;"> <p paraeid="{2b1ceb12-71c6-429e-a328-16133803347a}{91}" paraid="1989083050"><strong><span xml:lang="EN-US">Fraudster #1:&nbsp;</span></strong><span xml:lang="EN-US"><strong>The Temp</strong>:</span>&nbsp;<span xml:lang="EN-US">The common practice of b</span><span xml:lang="EN-US">ringing in extra staff to handle</span><span xml:lang="EN-US">&nbsp;seasonal</span><span xml:lang="EN-US">&nbsp;peaks in call volumes&nbsp;</span><span xml:lang="EN-US">opens doors to&nbsp;</span><span xml:lang="EN-US">additional &ldquo;inside&rdquo; threats</span><span xml:lang="EN-US">. A</span>&nbsp;<span xml:lang="EN-US">temporary agent may have little loyalty to a company, and perhaps was not properly trained and vetted &ndash; making&nbsp;</span><span xml:lang="EN-US">available PII extremely tempting.&nbsp;</span><span xml:lang="EN-US">For example, a temp</span><span xml:lang="EN-US">orary</span><span xml:lang="EN-US">&nbsp;agent could copy down a customers&rsquo; credit card numbers&nbsp;</span><span xml:lang="EN-US">as they are verbalized&nbsp;</span><span xml:lang="EN-US">during a phone transaction</span><span xml:lang="EN-US">. With th</span><span xml:lang="EN-US">is information in hand, the agent could o</span><span xml:lang="EN-US">rder a round of pizzas at lunch</span><span xml:lang="EN-US">&nbsp;or</span>&nbsp;<span xml:lang="EN-US">sell the information on the dark web, where</span>&nbsp;<span xml:lang="EN-US">stolen credit card number</span><span xml:lang="EN-US">s</span><span xml:lang="EN-US">&nbsp;with a CVV&nbsp;</span><span xml:lang="EN-US">go for</span><span xml:lang="EN-US">&nbsp;as much as&nbsp;</span><a href="https://www.experian.com/blogs/ask-experian/heres-how-much-your-personal-information-is-selling-for-on-the-dark-web/" rel="noreferrer" target="_blank"><span xml:lang="EN-US">$110</span></a><span xml:lang="EN-US">&nbsp;each</span><span xml:lang="EN-US">.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{2b1ceb12-71c6-429e-a328-16133803347a}{164}" paraid="404420134"><span style="display: none;">&nbsp;</span><span xml:lang="EN-US"><span id="cke_bm_116S" style="display: none;">&nbsp;</span><strong>Fraudster #2:&nbsp;The&nbsp;Accident-prone Agent</strong><span id="cke_bm_116E" style="display: none;">&nbsp;</span><span style="display: none;">&nbsp;</span>:</span><span xml:lang="EN-US">&nbsp;N</span><span xml:lang="EN-US">ot all fraudsters have malicious intentions</span><span xml:lang="EN-US">, and&nbsp;</span><span xml:lang="EN-US">most</span><span xml:lang="EN-US">&nbsp;agents are good, honest people. However, a&nbsp;</span><span xml:lang="EN-US">simple mistake&nbsp;</span><span xml:lang="EN-US">by an agent or any other contact center employee could wreak havoc. As such, an agent answering customer inquiries via email could open an attachment unknowingly containing a virus that quickly spreads across the contact center&rsquo;s network</span><span xml:lang="EN-US">, stealing customer PII.</span></p> </div> <div style="clear:both;"> <p paraeid="{2b1ceb12-71c6-429e-a328-16133803347a}{196}" paraid="192677913"><strong><span xml:lang="EN-US">Fraudster #3:&nbsp;</span><span xml:lang="EN-US">The Retaliator</span></strong><span xml:lang="EN-US">:</span><span xml:lang="EN-US">&nbsp;Any contact center employee&nbsp;</span><span xml:lang="EN-US">(</span><span xml:lang="EN-US">not just agents</span><span xml:lang="EN-US">)</span><span xml:lang="EN-US">&nbsp;can pose massive data security risks. What if an administrative assistant were to bribe an agent &ndash;&nbsp;</span><span xml:lang="EN-US">who has</span>&nbsp;<span xml:lang="EN-US">access to unencrypted customer information &ndash;&nbsp;</span><span xml:lang="EN-US">to&nbsp;</span><span xml:lang="EN-US">share&nbsp;</span><span xml:lang="EN-US">a few credit card numbers? Motivated by years of being underpaid, the assistant&nbsp;</span><span xml:lang="EN-US">may feel</span><span xml:lang="EN-US">&nbsp;that the crime is justified and snags a handful of card number&nbsp;</span><span xml:lang="EN-US">to sell on</span><span xml:lang="EN-US">&nbsp;the black market for profit.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{2b1ceb12-71c6-429e-a328-16133803347a}{238}" paraid="1874611413"><strong><span xml:lang="EN-US">Fraudster #4:&nbsp;</span><span xml:lang="EN-US">The IT&nbsp;</span><span xml:lang="EN-US">Consultant</span></strong><span xml:lang="EN-US">:</span>&nbsp;<span xml:lang="EN-US">Potentially, anyone&nbsp;</span><span xml:lang="EN-US">with access to the contact centers&rsquo; computers could illicitly access any available PII. This includes IT support, another frequently outsourced function. Armed with&nbsp;</span><span xml:lang="EN-US">basic hacking knowledge</span><span xml:lang="EN-US">, and no affiliation to the contact center or its organization,&nbsp;</span><span xml:lang="EN-US">a tech team member fixing an agent&rsquo;s desktop could covertly insert a Remote Access&nbsp;</span><span xml:lang="EN-US">Trojan (RAT) into the computer. This&nbsp;</span><span xml:lang="EN-US">piece of malware</span><span xml:lang="EN-US">&nbsp;allows the</span><span xml:lang="EN-US">&nbsp;IT consultant to&nbsp;</span><span xml:lang="EN-US">access</span><span xml:lang="EN-US">&nbsp;the device</span><span xml:lang="EN-US">&nbsp;remote</span><span xml:lang="EN-US">ly and tap into the contact center&rsquo;s network, where PII is ripe for the taking.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{27}" paraid="408834060"><strong><span xml:lang="EN-US">Fraudster #5:&nbsp;</span><span xml:lang="EN-US">The&nbsp;</span><span xml:lang="EN-US">Maintenance Worker</span></strong><span xml:lang="EN-US">:</span>&nbsp;<span xml:lang="EN-US">L</span><span xml:lang="EN-US">ess obvious</span><span xml:lang="EN-US">&nbsp;external threats</span><span xml:lang="EN-US">&nbsp;include</span>&nbsp;<span xml:lang="EN-US">clean</span><span xml:lang="EN-US">ing crews, HVAC technicians</span><span xml:lang="EN-US">&nbsp;and other third-parties with&nbsp;</span><span xml:lang="EN-US">unrestricted&nbsp;</span><span xml:lang="EN-US">access to the contact center&rsquo;s office</span>&nbsp;<span xml:lang="EN-US">&ndash;</span><span xml:lang="EN-US">&nbsp;i</span><span xml:lang="EN-US">f&nbsp;</span><span xml:lang="EN-US">sensitive data is held within the contact center network. For instance, a devious maintenance worker&nbsp;</span><span xml:lang="EN-US">on the night shift&nbsp;</span><span xml:lang="EN-US">could insert small USB sticks containing keylogging software into the backs of agent desktops.</span><span xml:lang="EN-US">&nbsp;This captures&nbsp;</span><span xml:lang="EN-US">any</span>&nbsp;<span xml:lang="EN-US">customer&nbsp;</span><span xml:lang="EN-US">information</span><span xml:lang="EN-US">, including credit card number</span><span xml:lang="EN-US">s</span><span xml:lang="EN-US">&nbsp;entered into the computer during&nbsp;</span><span xml:lang="EN-US">the phone&nbsp;</span><span xml:lang="EN-US">transaction.</span><span xml:lang="EN-US">&nbsp;The maintenance worker</span><span xml:lang="EN-US">&nbsp;could</span><span xml:lang="EN-US">&nbsp;collect the USB sticks, filled with PII, the following night</span><span xml:lang="EN-US">&nbsp;an</span><span xml:lang="EN-US">d</span><span xml:lang="EN-US">&nbsp;fund an online shopping spree</span><span xml:lang="EN-US">.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{113}" paraid="215633591"><strong>They Can&rsquo;t Hack the Data You Don&rsquo;t Hold</strong></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{123}" paraid="1651329254"><span xml:lang="EN-US">These&nbsp;</span><a href="http://info.semafone.com/download-now-flawed-five-internal-security-threat-guide-na?utm_campaign=CONTENT_ASSET_PERSONA_GUIDE&amp;utm_source=press&amp;utm_medium=pr" rel="noreferrer" target="_blank"><span xml:lang="EN-US">five fraudsters</span></a><span xml:lang="EN-US">, of course, are just a few examples of those who can compromise a contact center&rsquo;s data security, but serve as excellent reminders of the breadth</span><span xml:lang="EN-US">&nbsp;of</span>&nbsp;<span xml:lang="EN-US">internal and external&nbsp;</span><span xml:lang="EN-US">threats.</span><span xml:lang="EN-US">&nbsp;Contact centers (whether or not they are outsourced) must amplify their security and compliance efforts to&nbsp;</span><span xml:lang="EN-US">lower</span>&nbsp;<span xml:lang="EN-US">risks</span><span xml:lang="EN-US">. For example,</span><span xml:lang="EN-US">&nbsp;organizations should</span>&nbsp;<span xml:lang="EN-US">conduct in-depth employee background checks</span><span xml:lang="EN-US">&nbsp;and</span><span xml:lang="EN-US">&nbsp;ensur</span><span xml:lang="EN-US">e</span><span xml:lang="EN-US">&nbsp;outsourced&nbsp;</span><span xml:lang="EN-US">service providers obtain the&nbsp;</span><span xml:lang="EN-US">proper security certifications</span><span xml:lang="EN-US">. E</span><span xml:lang="EN-US">ducat</span><span xml:lang="EN-US">e</span><span xml:lang="EN-US">&nbsp;staff on emerging&nbsp;</span><span xml:lang="EN-US">threats and</span><span xml:lang="EN-US">&nbsp;seek technologies that</span>&nbsp;<span xml:lang="EN-US">tokenize</span><span xml:lang="EN-US">&nbsp;or encrypt PII.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{186}" paraid="361924246"><span xml:lang="EN-US">Another frequently used security&nbsp;</span><span xml:lang="EN-US">tactic requir</span><span xml:lang="EN-US">es</span><span xml:lang="EN-US">&nbsp;agents to work in clean rooms, where writing materials, cell phones, bags and other personal items are prohibited. While this prevents agents from copying down credit card numbers, or accidentally downloading malware, it does not deter outside hackers or unassuming third-parties from tapping into data stored on the network. Moreover, clean rooms attribute to poor employee morale and lead to high-turnover rates, so it is not the ideal fraud deterrent.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{198}" paraid="1161378542"><span xml:lang="EN-US">However, clean rooms, training programs and tokenization technologies can only go so far. To make a contact center an ultra-high security zone &ndash; without compromising job satisfaction or spending valuable time updating incident response plans &ndash;&nbsp;</span><span xml:lang="EN-US">simply&nbsp;</span><span xml:lang="EN-US">remove&nbsp;</span><span xml:lang="EN-US">s</span><span xml:lang="EN-US">ensitive data from&nbsp;</span><span xml:lang="EN-US">the</span><span xml:lang="EN-US">&nbsp;contact center environment.</span>&nbsp;<span xml:lang="EN-US">The more &ldquo;toxic&rdquo; data</span><span xml:lang="EN-US">&nbsp;is&nbsp;</span><span xml:lang="EN-US">kept out of the network, the less of a target the contact center will be for fraud</span><span xml:lang="EN-US">: t</span><span xml:lang="EN-US">hey can&rsquo;t hack the data you don&rsquo;t hold</span><span xml:lang="EN-US">.</span></p> </div> <div style="clear:both;"> <p paraeid="{0c57d514-0058-4f4c-aa5a-8777380d5e3a}{234}" paraid="292888090"><span xml:lang="EN-US">Emerging technologies like dual-tone multi-frequency (DTMF) masking solutions&nbsp;</span><span xml:lang="EN-US">can help&nbsp;</span><span xml:lang="EN-US">in this department. Many contact centers are adopt</span><span xml:lang="EN-US">ing</span><span xml:lang="EN-US">&nbsp;DTMF solutions to shield numerical PII from agents, nearby eavesdroppers and even call recording systems by allowing callers to directly input their information into the telephone keypad.&nbsp;</span><span xml:lang="EN-US">The&nbsp;</span><span xml:lang="EN-US">keypad tones are masked with flat ones so no one can decipher them, while the PII is sent straight to the appropriate third party (such as a payment processor). This means that the data never touches the contact center&rsquo;s infrastructure, keeping it out of the wrong hands.&nbsp;</span></p> </div> <div style="clear:both;"> <p paraeid="{328a59f4-043d-496e-9cd8-e067c285a9bb}{1}" paraid="1971326538"><span xml:lang="EN-US">Although it is virtually impossible to prevent every type of fraudulent activity, contact centers&nbsp;</span><span xml:lang="EN-US">c</span><span xml:lang="EN-US">an reduce risks by recognizing the many faces of fraud</span>&nbsp;<span xml:lang="EN-US">and</span>&nbsp;<span xml:lang="EN-US">by</span>&nbsp;<span xml:lang="EN-US">keeping&nbsp;</span><span xml:lang="EN-US">as much toxic information as possible&nbsp;</span><span xml:lang="EN-US">out of their networks in the first place.&nbsp;</span><span xml:lang="EN-US">These proactive&nbsp;</span><span xml:lang="EN-US">efforts will help organizations</span><span xml:lang="EN-US">&nbsp;stay</span><span xml:lang="EN-US">&nbsp;a step ahead of f</span><span xml:lang="EN-US">raud</span><span xml:lang="EN-US">, create a safer work environment and keep brand names out of the news for falling victim to a devastating data breach.</span></p> </div> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/personally-identifiable-information-pii" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Personally Identifiable Information (PII)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/fraud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fraud</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/third-party-risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Third Party Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/nearshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Nearshoring</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/offshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Offshoring</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Staying a Step Ahead of Contact Center Fraud - Future of Sourcing" addthis:url="https://futureofsourcing.com/staying-a-step-ahead-of-contact-center-fraud"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Thu, 10 May 2018 18:22:57 +0000 Tim Critchley 1166 at https://futureofsourcing.com https://futureofsourcing.com/staying-a-step-ahead-of-contact-center-fraud#comments Employment fraud sinks ships, so give HR the data to keep your company buoyant https://futureofsourcing.com/node/918 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Rob-Catalano-Sep-2015-1-420x215.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Rob-Catalano-Sep-2015-1-420x215.jpg" title="Employment fraud sinks ships, so give HR the data to keep your company buoyant" class="colorbox" rel="gallery-node-918-E4lRRVLbX8E"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Rob-Catalano-Sep-2015-1-420x215.jpg?itok=AyH-eCmH" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Staff turnover costs companies a shocking &pound;4.13billion per year. Hiring the right people can make or break an organisation, and save thousands in turnover costs.</p> <p>Dishonest employees are the silent threat from within organisations, and they are a small but highly impactful group. Worryingly, 30% of businesses fail due to employee theft and the cost of employee fraud to UK businesses is thought to amount to&nbsp;<a href="http://www.cipd.co.uk/NR/rdonlyres/710B0AB0-ED44-4BD7-A527-B9AC29B28343/0/empfraud.pdf" target="_blank">&pound;2bn per annum</a>. It&rsquo;s unsurprising, therefore, that the expected employee turnover rate will rocket to 18% &ndash; and push HR resource to its limit &ndash; by 2018.</p> <p>False identities, fake qualifications and references, adverse financial or credit histories, and even concealed criminal records (plus many other problems), haunt Human Resources departments as they rally to protect the workplace from 80% of applicants whose CVs are classed as &lsquo;misleading&rsquo;. When IT systems, payroll and data protection is at stake, a small white lie on an application suddenly has very serious implications. Employers are fighting the fires of financial losses, reputational damage, regulatory implications and impact on morale internally, as staff turnover increases and trust from management plummets.</p> <p><strong>Pressure and time-wasting</strong></p> <p>To suffocate the flames of fraud, HR employ rigorous investigative checks &ndash; work worthy of Scotland Yard&rsquo;s best detectives employed circa 1973 &ndash; manually sifting through CVs, conducting background checks, hosting endless rounds of face-to-face interviews, proofing examinations, trials and evaluating psychometric testing. According to the High Fliers report, employers experienced&nbsp;<a href="http://www.highfliers.co.uk/download/2016/graduate_market/GMReport16.pdf" target="_blank">a huge 25% uplift</a>&nbsp;in graduate applications for new roles and a &ldquo;significant year-on-year increase&rdquo;, putting HR under more pressure than ever to hook the winning ducks from the barrel and ensure that no thin file candidates escape to the competition, under the radar.</p> <p>If a dishonest employee sails through these checks &ndash; a glance at the news confirms this is by no means a rare occurrence &ndash; and has the opportunity to act dishonestly once they&rsquo;ve settled into a role, the&nbsp;<a href="http://www.legislation.gov.uk/ukpga/2006/35/crossheading/fraud" target="_blank">Fraud Act (January, 2007)</a>&nbsp;is in place to protect employers as they untangle tactical, deceptive and misleading behaviour. The act defines illegal malpractice as fraud by misrepresentation (with the aim to make a personal gain, or expose another to risk of loss), fraud by failing to disclose information, and fraud by abuse of position. In the recruitment stages, employers are actively combatting the second abuse, gathering data so that if there is a failure to disclose, they know about it.</p> <p>Fixing the fallout of fraud can be as costly and time-consuming as the recruitment process and a cause for anxiety. Employers burned by dishonesty are inclined to apply stringent monitoring as a remedy, however&nbsp;<a href="http://www.cipd.co.uk/NR/rdonlyres/06B92739-19F8-4BB4-AE47-796EA5F5CB15/0/manachang1105.pdf" target="_blank">research from the CIPD</a>&nbsp;suggests that employees placed under an unfiltered and constant microscope are more likely to harbour unhappy and critical feelings towards their employer and suffer from stress. Trustworthy, but unnecessarily alienated, these employees resign as a periphery casualty of fraud and the recruitment headache starts all over again.</p> <p><strong>Big social data for employee vetting</strong></p> <p>Monitoring employee activity during working hours is a tired, ineffective and costly solution. Employers and HR are determined to find the right candidates, but with a process or technology that is both time sensitive and detail centric. Social media is a significant tool when trying to get a sense of character, and&nbsp;<a href="http://hellosoda.com/employeevetting/" target="_blank">93% of hiring managers review a candidate&rsquo;s digital profiles before making a hiring decision</a>.</p> <p>However, we&rsquo;re not suggesting that HR should dither about on Facebook as best practice. The average person owns 5.54 social media accounts and depending on the volume of applications, checking social media is a significant time allocation for any HR department.</p> <p>Hiring managers that privately evaluate candidates&rsquo; reliability on social media will review whatever information isn&rsquo;t protected by security settings. Photos and videos are the obvious targets (scandal-seeking is high on the agenda), but other snooping successes include relationship stability, the tone and frequency of free-form updates, and even friendship circles, groups and likes.</p> <p>This information, when collected manually, offers little real context about the candidate. What&rsquo;s more, the hiring manager&rsquo;s deductions will be invariably biased even with the best intentions, manipulated by their own standards of acceptability and what they perceive to be acceptable as an official representative of their employer&rsquo;s moral compass. One HR&rsquo;s drunken mess is another HR&rsquo;s Christmas party bonding dream. Tomayto, tomahto. And much of this evidence won&rsquo;t indicate fraud to the naked eye.</p> <p>Employers should actively avoid investing resource when pursuing manually collected circumstantial and time wasting research, because this type of personality snapshot doesn&rsquo;t directly relate directly to potential employability. Social data does however contain hugely significant information that will aid HR when recruiting, particularly if it&rsquo;s automated.</p> <p>With big data software in place, HR staff could take a hands-off approach, allowing technology to overlay social personality profiling with professional qualifications and experience, to create a fully-formed and insightful profile that marries up pools of data to identify patterns of behaviour, good and bad.</p> <p>There is no doubt that when managed correctly big data makes employee-vetting easier and faster, but most importantly, the process becomes far more accurate. And for HR and recruitment consultants, big data technology completely disrupts their tried, tested and tired industry, buckling under the volume of applications and the increasingly sophisticated methods of fraud cross-channel.</p> <p><strong>Exposing fraud in a heartbeat</strong></p> <p>If HR did invite the applicant to connect their social accounts to a firm&rsquo;s big data software for analysis, what output could employers anticipate?</p> <p>Potentially historical discrepancies relating to the start and end time of a role, dismissal or significant time away from work &ndash; determining if they were sacked, &lsquo;travelling the world&rsquo; or not&hellip; Plus their likelihood to fit into the firm&rsquo;s culture, reviewing their communication style and use of language.</p> <p>As these big data tools process the candidate&rsquo;s data, they can cross-check references and construct a true view of employment history, identifying fraudulent instances and highlighting behaviour patterns, such as absenteeism, that could be cause for concern &ndash; all based on factual evidence. It could also help HR professionals better construct individual employment packages using data-driven insights, from the length of a probation period to relevant benefits and pay.</p> <p>Big data reduces the risk of fraud during recruitment and streamlines the hiring process, but it also reduces the risk associated with resignation later on. In theory, big data collection has the opportunity and ability to anticipate a candidate&rsquo;s happiness and health, predicting how well they would acclimatise to the culture within the workplace. It&rsquo;s thought that by simply identifying personality traits and role sustainability,&nbsp;<a href="http://static1.squarespace.com/static/523403eae4b03309a862d291/t/56717b1825981dd75e7d378e/1450277674704/Employee+Infographic.jpg?format=1500w" target="_blank">employee churn can be reduced by 38%</a>.</p> <p><strong>Identifying personality types in the workplace using data</strong></p> <p>Why hasn&rsquo;t HR snapped up personality profiling previously? Until now, it&rsquo;s been difficult to analyse unstructured data and filter out irrelevant information to return correct and valuable insight, not to mention put it into action. For example, how will an employee react to feedback based on data collection? The technology is now sophisticated and discerning enough to give data-driven decisions human judgement context.</p> <p>Psycholinguistic analysis tools can allocate personality scores to the employee, manifesting as grouped personality traits: Extraversion, Agreeableness, Conscientiousness and Openness.</p> <ul style="list-style-type:square;"> <li>Individuals high in&nbsp;<em>Extraversion</em>&nbsp;are typically outgoing, sociable and adventurous, experience more positive emotions about themselves and their surroundings.</li> <li>Employees with&nbsp;<em>Agreeableness</em>&nbsp;take pleasure in helping others and tend to be charitable. They are likely to have more positive views of their jobs and are more likely to stay at an organisation out of a perceived duty to repay them for their fair treatment and support.</li> <li><em>Conscientious</em>&nbsp;employees are tidy and organised planners, they often feel as if they owe the organisation contractual obligations and feel as though they need to repay the company by continuing to work there.</li> <li>Finally,&nbsp;<em>Open</em>&nbsp;employees are risk-takers, who are persuaded by the promise of new and exciting opportunities. They&rsquo;re more likely to look for a new job and have a tendency to be curious and look for new opportunities and learning experiences.</li> </ul> <p><strong>Technology will support staff, not replace them</strong></p> <p>Use of such technology would not replace HR or recruitment consultants; instead it relieves the banality of data processing, and shifts focus to data interpretation and application during face-to-face Q&amp;A. In theory, big data affords HR and recruitment professionals the opportunity to heighten their policies and practice, improving their commitment to the recruitment process and their satisfaction in doing so. Employers should notice an improvement in morale and high performance not just from the big data recruits, but also the staff that do the hiring.</p> <p>Employers will be afforded the opportunity to incentivise recruitment without the fear of bad hires to gain short-term bonuses. The data supports well-judged hires and a working culture that celebrates employees who discover new talent. Personality scores give you real insights into candidates. They can predict work ethic, likelihood to quit, creativity, and so much more.</p> <p>Until big data is recognised as a genuine support tool, employers will find themselves endlessly micromanaging the recruitment process, chasing overstretched and underappreciated HR staff for applicant data they can&rsquo;t possibly collect in entirety without bias, handling internal crises when poor-hires hit the office floor, and fighting the fraud that stops 30% of firms in their tracks.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/talent-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/fraud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fraud</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-prevention" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Prevention</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/software-as-a-service-saas" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Software as a service (SaaS)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/talent-acquisition" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Acquisition</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Employment fraud sinks ships, so give HR the data to keep your company buoyant - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/918"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 15 Apr 2016 13:30:31 +0000 James Blake 918 at https://futureofsourcing.com https://futureofsourcing.com/node/918#comments