Also known as the Pareto Principle, the 80/20 rule can be roughly applied to virtually any business need. In the 80/20 rule, organizations are able to get eighty percent of their results using twenty percent of their resources. In sales, 80 percent of all sales may be completed by the top 20 percent of employees. In fraud management, 80 percent of fraud can easily be detected and mitigated with 20 percent of the effort. Many business owners believe that they can't afford fraud management, when in fact, most fraud can be managed affordably using the right solutions.
The Biggest Risks in Fraud Management
With the advent of services based on the Internet of Things or Mobile Money for instance, the opportunities available to fraudsters are growing. Many organised criminals now have access to virtually limitless resources, which they can use to target businesses until they find a vulnerability - the so-called "weakest-link" within targeted organisations. They are using known exploits to narrow down the businesses that are least likely to be protected. This is where the 80/20 rule to fraud management becomes important.
Small- to mid-sized businesses may feel as though they cannot invest in state-of-the-art fraud management solutions, or consulting and training. And they may be right: it might not be cost-effective for them to do so. However, they can easily afford a solution that will substantially reduce their risk. Though very little can stop dedicated attackers even using best-in-class equipment, a solution that is at 20% of the cost of a tier-one industrial system can stop 80% of the attackers and attacks. Using the 80/20 principle, businesses can manage and mitigate risk without having to invest more than is prudent.
The Importance of Telecom Fraud Detection
Fraud can cost an organisation millions of dollars. Wide-scale fraud can lead to the theft of airtime resources and even financial and personally identifiable information, ultimately leaving a company to not only recover its direct damages but also to revamp its own internal security solutions and policies.
Luckily, most fraud threats are known and can be prevented. Many fraud threats are either already well understood by telecom fraud solutions providers, as they bear certain hallmarks, such as specific behaviours and activities. By applying the 80/20 principle, telecom operators are able to identify and mitigate fraud attacks as they arise, therefore saving themselves potentially millions or even tens of millions of dollars.
Once fraud has occurred, it becomes far more difficult to mitigate. Money that is lost is often gone forever, as it can disappear without a trace. Once information has been breached, there's often no way to pull it back. A single incidence of fraud can easily spell doom for a company: there are many companies that have shut down entirely in the months following a major fraud attack.
With as many fraudulent attacks as there are each day, businesses need to be vigilant and they need a solution that can automatically detect incidences of fraud. Telecom fraud solutions providers are able to substantially reduce the number of fraud threats that go unnoticed, without increasing the amount of resources and administrative time that the business needs to use day-to-day.
There's No Guarantee in Security
Even the best, next-generation fraud detection solutions cannot guarantee complete security. There is no system that offers 100% fraud detection, as fraud detection is becoming too advanced. Though a business can invest in the best fraud management solutions available, they may still become the victim of fraud. Not only that, but they will have wasted a substantial amount of money trying to protect against that last 20%. Security is truly a matter of risk management.
Fraud is extraordinarily costly to telecom operators. Not only does it cost the business in money and time, but it can also result in damage to the company's reputation. By investing in telecom fraud solutions that are fit for purpose, businesses can reduce their exposure and therefore their risk.
At XINTEC we are committed to supporting and enabling small- and mid-tier operators worldwide to achieve the same level of risk avoidance and prevention as larger-scale operators, by providing risk management software tailored to their specific needs.
Sean Killeen is CEO of Xintec.