Whilst we tend to think of a go-ahead, thrusting business being driven by entrepreneurial spirit and leading edge, state of the art products and services, in reality it is managing business risks that often differentiate a successful enterprise from one doomed to fail.
Business is all about risk taking, of course. Whether it be in a start-up phase where investors are tempted to part with their cash in return for potential profits in the future, or in growth phases where investments into research or capital equipment may be needed to fund further expansion. It is how a business identifies and manages the various risks that it is exposed to, that can help lead to enduring success.
We will look at how several business risks can be identified and managed using software systems in this article.
Managing payment system risks
You don’t need an MBA from a leading business school to realise that cash flow is the life blood of any business. Accepting payments from customers forms a major component of the cash flow process. A traditional business, particularly in B2B business transactions, will issue invoices and accompanying payment terms to its customers. It will use its accounting systems to keep track of payments received and be able to monitor and chase those customers who have outstanding payments.
An Internet based business with predominantly retail customers will require different payment methodologies, mostly involving credit cards with transactions occurring over the web, with the customer not being able to present their credit card in person.
CNP fraud
Accepting web based credit card payments poses many security and fraud prevention challenges. Card not present fraud (CNP fraud) is one of the most common types of payment frauds.
This occurs when a fraudster attempts to impersonate someone elses credit card details to make an online or telephone purchase. As the retailer cannot actually see the credit card being used, there is a risk that the card has been stolen or its’ details ascertained through some devious and criminal, means.
As retailers are responsible for losses incurred through card not present fraud, these losses can exert a significant impact to their profitability and present significant risks, particularly if the retailer is relying on low margins.
Reducing the risk of CNP fraud requires the retailer to validate the card holders address, three digit security code and card expiration date. It is surprisingly easy for a fraudster to acquire these details, which is why online retailers are increasingly using credit card validation software that performs far more sophisticated anti-fraud checks.
Many retailers are turning to 3D credit card validation software using a 3DS server which offers a high level of rigorous validation and scrutiny. 3D validation takes into account factors such as purchase history from the presented credit card and risk based analysis which provides a risk score that can be used by the retailer to decide if a purchase should proceed or not.
3D validation software is often delivered as a SAAS solution and is seamlessly integrated into the web site checkout process. Being relatively simple to integrate into e-commerce websites, this is a software solution that clearly reduces transactional risks, allowing a business to protect itself from this common form of fraud.
Managing health and safety risks
It is often said that a company’s employees are its best asset, but it is also true to say that employees present some of the biggest risks that a business faces.
An employer holds legal responsibility for the health and safety (EHS) of its employees. This is a huge responsibility with potentially enormous risks of litigation and financial compensation should a business be found liable for harm occurring to one of its employees.
Central to EHS risks to a business is that term “harm”. It is tempting to think of it as some form of injury incurred during normal operation of a machine in a factory. However, there are many more harms that can befall an employee such as stress, psychological traumas, hearing and vision impairment, reduction of physical capabilities such as carpel tunnel syndrome, and many more.
As there is so much focus on health and safety, businesses must take this aspect of their operations very seriously. This requires training, safety certifications and environmental monitoring which all require paper trails and documentation to prove that the company is diligent with its EHS policies and responsibilities.
EHS incidents
Should an EHS incident occur then using incident management software will greatly assist the employer in ensuring that all the required steps in managing and reporting the incident have been undertaken, that required legal documents have been automatically produced and all documentation is archived should it be needed for legal or compliance scrutiny.
Following health and safety procedures and managing EHS incidents with a legal and compliant approach will help a business reduce its exposure to litigation and compensation risks. Using a tried and tested software solution that is updated as legislative requirements change will be of significant benefit, however this has to be used in conjunction with a comprehensive company wide approach to employee care.
Conclusion
We have looked at two areas of significant risk to businesses that can be mitigated by the use of software solutions.
These are often delivered via software as a service implementations which reduces maintenance and the need to install frequent updates. This is critical to ensure that the latest anti-fraud and EHS compliance requirements are being used.