“If you think risk management is expensive, try an accident.”
– Stelios Haji-Ioannou (founder of EasyJet)
Managing fraud and risk in mobile money is critically important to ensure the commercial sustainability of an operator. Indeed robust risk management protects more than just revenue; it protects the customer and the reputation of the industry as whole.
The reality is that a practical, effective and relevant risk management strategy is both time-consuming and resource intensive. Operators need to ensure adequate resources to support the development, the implementation and the monitoring of an effective risk management strategy. Fraud, in particular, is a primary area of concern for risk managers. Across all industries, including mobile money, we hear of incidents of fraud that have exposed businesses to excessive financial loss and almost irreversible reputational damage. Often these cases would not have happened had there been a greater focus on the risk management planning and/or the implementation of controls. In mobile money, fraud is one of the most challenging risks to manage and operators cannot afford to take it lightly.
However, it would be impossible to protect against all possible loss due to fraudulent activity. The art of risk management is creating visibility of fraud and implementing controls without stifling commercial growth. But this balancing act can be challenging. How can mobile money operators ensure they are effectively managing the risk of fraud in their mobile money deployment? With this question in mind, Michael Joyce, an expert in mobile money risk management, and I have been working with operators to better understand fraud and risk in mobile money and explore some of the effective and practical risk mitigation practices operators currently employ.
As a result of this research, today MMU is releasing a publication on fraud and risk management in mobile money. The article, “Managing the Risk of Fraud in Mobile Money” focuses on an approach operators can use to mitigate the risk of fraud. We rely on a foundational risk management framework as well as the experiences and insights of key players in the mobile money industry. We hope this tool will be an on-going resource as practitioners develop, implement and review how they manage the risk of fraud in their mobile money deployment.
This month, MMU will be releasing new publications on organisational structure, interoperability and the ecosystem of mobile money, and merchant payments. Stay tuned!