Staying ahead in a risky marketplace - II - FOLLOWING THE MONEY – THE DRIVERS OF FRAUD

Fraud is a major concern amongst operators. All reports and studies on fraud in recent years show that fraud is costing operators billions of dollars yearly on a global basis.Ref5 The security threats are expected to multiply with the expansion of the next generation IP-based networks and the rapid growth of gadgets, services and applications connected to mobile networks and the Internet. Understanding the market challenges for fraud and revenue management is important. But knowing how to address the most common and expanding types of fraud is crucial for securing the overall business and keeping customers safe from cyber-attacks.
In order to be successful in the struggle against fraud, operators need to have a strategy in place and also have a clear focus on winning the trust of their customers.. Otherwise, the consequences will not only put operators at a financial risk due to more losses. It will also – if operators fail to guarantee a safe connection and usage of services or applications – endanger the subscriber business model due to growing number of dissatisfied customers. This, since many new mobile Internet services are linked to money and economy, which in turn means that it is even more important that customers can feel safe and trust the service provider.
THE IMPORTANCE OF QUANTIFYING FRAUD
Being able to quantify fraud and measure the damages related to fraud, enables organisations to realise the losses due to fraud and take appropriate actions. But it also requires a focused leadership and an organisation in place that have the know-how to act proactively and quickly when fraud attacks occur. ITU estimates that operators’ aggregated yearly loss, on a global basis, is approximately 6 per cent of the aggregated turnover.Ref 6 Translating this in to money means that operators loose perhaps 30, 40, or more than 50 billon USD, per year. Quantifying fraudulent activity is very difficult and many frauds remain undetected because they can often be connected with internal errors in the network. Also, being open about fraudulent activity statistics can put the brand name at risk, thus creating bad PR. But, being able to pinpoint fraud is crucial simply because it defines the starting point of the quantifying process.
The variation of fraud is large. Only an experienced fraud or revenue assurance manager would be able to decide which techniques to use to prevent fraud. This is why training and leadership is an integral part of fraud prevention.
An enhanced integration of methods and fraud alarm functions amongst operators in the world would be a big step towards reducing the loss to fraud on a global basis. It would also enhance the trust for operators, thus turning loss due to fraud to increased revenue streams.