By Pradeep Lankapalli, Managing Director, India & South Asia, Thomson Reuters
Digitization and automation are transforming every aspect of the global economy across industries, be it banking, travel, communication or entertainment. The scenario is no different in India where an estimated 300 million internet users have adopted digital technologies as a way of life, both personally and professionally. Another 200 million Indians are likely to jump on the digital bandwagon in 2017.
The digital revolution has particularly transformed the business and industry landscape, creating new and exciting opportunities for business growth. On the other hand, digital innovation and disruption have also raised the incidence of risk for organisations operating across industries including banking and finance, manufacturing, travel and entertainment.
During my discussions with several industry leaders, it is very clear that they are investing heavily in creating digital tools and assets to boost growth. While they are very excited about the opportunities that digitization offers, very few of them are cognizant about the host of risks they must be ready to mitigate. In the era of rapid digitization, risks will emerge much faster than one can anticipate and corporations must have a robust risk management infrastructure to mitigate these risks and ensure a smooth business to protect both business and consumer interests.
The rising incidence of digital and internet fraud worldwide is a wakeup call for Indian industry to take adequate cyber security measures to guard their digital-based businesses. The recent cyber-attack, WannaCry Ransomware, and the panama paper leak are only two examples of the challenges and threats arising due to digitisation. Online financial frauds, including loan scams, have become all too common, as evident from the sharp rise in non-performing assets (NPAs) in the banking sector.
Companies and organisations need to become proactive in gathering intelligence, identifying probable risks and raising red flags to prevent cyber-related attacks and their consequences on businesses and profits and, more importantly, consumer trust.
Here are a couple of examples of how risk and compliance officers can manage their risk and compliance programs, and minimizing risks to their assets, services and properties. Companies must leverage data and technology to screen stake holders – both individuals and companies, for any past financial crime records or negative media news. Companies specializing in trusted data and technology can provide such information in a structured manner so that organisations can streamline search and analysis to save time, and take suitable action.
Move from Know Your Documents (KYD) to Know Your Customers (KYC)
The current business scenario underscores the need for organizations to run enhanced due diligence on their stake holders. This essentially means that as a part of their KYC check, companies must move beyond collection of required documents to a thorough due-diligence program to flag off past frauds/regulatory scrutiny, Politically Exposed People (PEPs) and focus on ultimate beneficiary ownership.
The current digital landscape calls for an absolute sense of urgency to enhance risk management practices that makes it easier to identify potential events and threats that may undermine and damage a company and its reputation, and take effective measures.
If you have an interesting article / experience / case study to share, please get in touch with us at [email protected]