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‘WICKED PROBLEMS’ The next big opportunity you should be paying attention to
FITTER, HAPPIER How employee mental health is a bottom-line issue too
THE SHIFTING SANDS OF FRAUD With more economic turmoil on the horizon, businesses need to pay closer attention to the risks
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FRAUD AND THE FUTURE OF WORK • NOVEMBER 2020
New work new danger SPECIAL REPORT How a more familiar workspace environment creates new risk and opens new doors for cyber-criminals
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Why “wicked problems” are the next big opportunity you should be paying attention to OPENING SHOTS MARCUS KIRSCH
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E F O R E C O V I D -19, established companies had plenty of time to catch up with their more progressive competitors – but since 2020, this opportunity has vanished. Selling harder is no longer cutting it. Progressive companies don’t win because of their tech, they win because they understand problems better than you. Their investments beat yours every day. Margins have evolved into a new market.
Why not technology? Like any other tool, technology is an enabler, not a value in itself. You can misuse a tool. Big data, blockchain, lean or agile are just garbage-in-garbage-out systems. Technologists know this. The value is not in the technology, but in how or why you use it. Most organisations are using Microsoft packages, for example – so why does their performance differ?
The real value Joe Pine’s book The Experience Economy talks about the increase
of value across commodity, product, service and experience. H i s tor ic a l l y, ove r t i me commodities became cheaper, their margins dropped, and products became the next high-margin value. We are still living in a mixed product and service economy. Services have exponentially higher margins than products. Due to the increase in digital services, services have decreased margins. The next is experiences, which is where Joe’s book comes in. Experiences outpace services. Experiences have been around since the 90s and are spreading. But from about 2010, we started to see the next margin market – the market for wicked problems.
What are wicked problems? Think of wicked problems as moving and evolving targets. Covid-19 and other pandemics, poverty, the circular economy and climate change are wicked problems. Other examples are team dynamics, social media campaigns or how people save money. The
“Progressive companies don’t win because of their tech – they win because they understand problems better than you”
Now is the time
Marcus Kirsch is founder of The Wicked Company and The Wicked Podcast. His book, The Wicked Company: When Growth Is Not Enough, is published by Koehler Books
two main characteristics are that it is impossible to ever fully understand a wicked problem, as while you are studying it, it keeps evolving. It is also nearly impossible to predict the impact of your solution, as the solution itself will change the problem dynamics.
The new market Solving these problems represents a fantastic value to customers. Take saving money. Apps such as Moneybox, for example, use algorithms and behavioural science tricks to nudge you into saving money here and there, and evolve with you. Compare that with banks giving customers a savings account, which is a product, and you see the difference. Uber is another example
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– it evolves its prices every day to ensure the right mix of rides and drivers out on the street. To grow as an organisation into this market, all you need to do is to identify the wicked problem and then create solutions for it.
Digital transformation won’t create all the benefits you hope for, because you are not aiming them to help you become part of this new market. McKinsey agrees with a 70 per cent observed failure rate to create benefits. Instead of continuing to lose money, at least stop investing in efficiency improvements. Efficiency makes a product better, but that is not where the margins are. Progressive companies invest in becoming more effective in solving a wicked problem. T his is why they exponentially outpace you. We live in a wicked problem market now. The more you are aware that this is happening, the more likely you will use this as an opportunity for the right change.
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US government seizes $1bn of bitcoin from Silk Road account
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Video conferencing is rapidly expanding – but it’s not just because of recent working restrictions
Video conferencing sector set to double value to $8.3bn by 2027 • Future AI developments expected to drive growth • Zoom, Cisco et al investing in new launches and upgrades
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HE VIDEO conferencing industry is, perhaps unsurprisingly, one of the few sectors set for enormous growth in the wake of the coronavirus pandemic, according to two new reports, as businesses worldwide rely increasingly on their technology to enable their employees to work remotely. A report undertaken by consultancy and data forecaster Verified Market Research (VMR) projected that the sector – dominated by apps such as Zoom, Skype and Google Meet – would be worth more than $8 billion by 2027, expanding at a compound annual growth rate (CAGR) of 9.6 per cent from 2020. This is double the industry’s estimated 2019 value of $4.02 billion. However, the survey pointed out that this growth was not necessarily linked to Covid-19 restrictions, but that it had already been boosted by “robust urbanisation”. Other factors, such as the emergence of 5G and investment from tech heavyweights such as Cisco, Adobe and Microsoft into increasing bandwith, video quality and “telepresence” – the degree to which
“The survey pointed out that the growth was not necessarily linked to Covid-19 restrictions, but that it had already been boosted by factors such as ‘robust urbanisation’, as well as other factors such as 5G and tech investment”
technology enables participants to feel that they are physically interacting with others – are also set to drive uptake and growth within the sector. VMR also singled out the growth of artificial intelligence as a “trendsetter in video conferencing”, and that tech leaders were developing, or would be developing, machine learning algorithms that could, for example, automatically reduce background noise while people were speaking, transcribe audio and count attendees.
A separate report from market research firm MarketAndMarkets observed corresponding trends. “There are several factors that have been driving the market growth since the last decade, such as the increasing focus of companies towards the expansion of their businesses in the global market and in the management of the workforce in various subsidiaries,” it said. “However, the outbreak of the coronavirus has impacted the video conferencing market positively.” The report similarly noted that tech firms were putting their weight behind new developments in video conferencing. Cisco has announced security and compatibility enhancements to its Webex conferencing platform, as well as introducing compatibility with Box and telehealth patient portal Epic. Zoom, meanwhile, is set to launch Zoom for Home, a new service that incorporates an always-available dedicated touchscreen device. Other companies such as Vuzix, Twilio, and salesforce.com are introducing their own enhancements and upgrades.
NOVEMBER 2020 Publisher Bradley Scheffer | Editor Dan Geary | Client manager Maida Goodman | Project managers Pawel Adamczuk, Paul Aitken, Tom English, Justin Payne, Adam Robins, Matthew Rodford | Contact us: info@lyonsdown.co.uk
HE UNITED States Department of Justice (DoJ) has appropriated more than $1 billion of bitcoin from an account linked to the notorious Silk Road online black market. The haul represents the largest seizure of cryptocurrency to date, and follows the 2015 arrest and conviction of Silk Road founder Ross Ulbricht, currently serving two life sentences in the US for conspiracy to distribute narcotics and money laundering. “Silk Road was the most notorious online criminal marketplace of its day,” said US attorney David L Anderson. “The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question: where did the money go?” Third-party software from a bitcoin attribution company was used to trace 54 transactions of bitcoin that was stolen from Silk Road in 2013. The trail led US law enforcement to an “Individual X”, who was found to have hacked the funds from the online marketplace. The funds are now in the possession of the United States. “Criminal proceeds
A protester outside Ross Ulbricht’s trial in 2015
should not remain in the hands of the thieves,” said Internal Revenue Service Criminal Investigation (IRS-CI) special agent Kelly R Jackson. “Through CI’s expertise in following the money, we were able to track down the money. The Washington DC Cyber Crimes Unit is uniquely specialised in tracing virtual currency transactions, and we will continue to hone our skills to combat illegal activity.” From its inception in 2011, Silk Road was the world’s largest illicit online black market, providing unlawful goods and services, from illegal narcotics to murders-for-hire, to well over 100,000 users, until it was shut down in 2013 by US law enforcement.
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A Spartan with a laptop Why the future of fraud prevention might need to be a lean, mean fighting machine
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WISE PHILOSOPHER once wrote, “prevention is better than cure”. It’s certainly true for fraud, for which there is rarely a cure once it has happened. Which means that, instead, we must place all our focus on prevention. There are endless reports of the tidal wave of fraud that has emerged, and will emerge, from Covid-19, so fraud prevention is at the forefront of everyone’s minds, right? The truth is, it isn’t. Organisations are in turmoil – budgets set in January are a distant memory, supply chains are under significant pressure, employees are on furlough (particularly those in classic control functions), and cash flow is critical. That means investment in traditional back-office functions is minimal. Businesses don’t usually spend money on prevention in times of crisis – not when they’re struggling to pay staff and suppliers. Contrast that depressing situation to the opportunity currently presenting itself to fraudsters – both those that have already stepped over the line and those who might be thinking about it. Normal control environments are in flux and unlikely to be fit for current operational purposes, traditional control functions are at home and unable to get out into the field, emergency funding is being issued rapidly and without the usual checks and balances, and supply chains look markedly different to how they did just six months ago. This all makes the perfect recipe for a significant increase in fraud. So what are we seeing wise corporates do now to protect themselves, and what should they be doing in the future? The answer is, be proactive, and don’t place all your eggs in one basket.
Making fraud prevention a company-wide responsibility Any fraud prevention system is only as strong as its weakest link, and that is invariably people. As such, clients are extending fraud risk management beyond the usual control functions and leveraging the three lines of defence. We are seeing companies implement a range of key measures, including: • Educating employees on the latest fraud trends, and providing practical advice and examples to help them remain aware and alert. This improves engagement and prevents people from zoning out during the usual annual online training they often try to complete as quickly as possible • Designing tailored control frameworks, that account for jurisdictional anomalies and cultural nuances, to ensure that the
“We’ve seen many corporates lose millions to fraud, and then spend further millions trying to recoup what they’ve lost, when an insignificant upfront investment in fraud prevention would likely have detected the issue” Howard Cooper and Zoë Newman are managing directors and co-heads of financial investigations at Kroll, a division of Duff & Phelps
control environment is adapted to changing circumstances and environments, as opposed to a one-size-fits-all control policy • Involving internal audit in the fraud prevention strategy. This invaluable and often overlooked function has some of the best and most hands-on knowledge of how the control environment works in practice. As such, auditors can provide informed advice to the design of fraud prevention mechanisms
Smart data analytics “It would have been so obvious if anyone had looked,” is a phrase we hear time and again in fraud investigations. The problem is, very few do. If people are the weakest links in fraud, then why does the majority of fraud prevention rely on them? Savvy corporates, those that truly understand that fraud prevention is a cost-saving in the medium term, have deployed sophisticated data analytics, running bespoke algorithms that mine the information available to them internally, within their financial and non-financial internal systems to spot anomalies at headquarters, but also around the world, in their most far-flung operations. No one knows this “live monitoring” is happening beyond a select few, who can use the results to spot red flags and dive into the data to assess the true extent of a potential problem, or a simple false positive. These “Spartans with
a laptop” can sit anywhere in the world, and do the work of tens of auditors at the push of a button. Big data is the future, but the ability to sufficiently understand your business to design appropriate queries to interrogate it sophisticatedly is what smart corporates are doing now.
Live risk assessment Risk assessment has become something of a buzzword over the years, and frequently addresses business risk as well as bribery and corruption. The danger is these exercises become rote, and desktop focused. Only a few properly invest in well-thought-through fraud risk assessments, that are live documents. The reality is all risk assessments should be live, but ever more so in the case of fraud. All too often the risk focus is around cyber-security and the external threat, or an errant employee eliciting funds from the company – your typical frauds, so to speak. Only a handful will properly assess how their operational business environment has changed in the past six months and how controls need to be adapted to take these changes into account. What of the risk of financial misstatement, for example, or postponement of costs – all initially well intended and not an obvious immediate loss to the firm but fraud nonetheless. So what is the future of fraud prevention? We’ve seen many corporates lose millions to fraud, and then spend further millions
trying to recoup what they’ve lost, when an insignificant upfront investment in fraud prevention would likely have detected the issue before it became business critical. Who knows what the world will look like a year from now, but consider this: corporates are being attacked by organised criminal networks constantly, if silently. At the same time their defences are weakened – whether through cost cutting, or the simple and unforeseen operating environment we find ourselves in. The profile of a professional fraudster has evolved: they are creative, specialised, use technology and adapt to their operating environment. The Spartans of ancient Greece created a focused fighting force, trained in the latest fighting techniques and capable, with a small army, of defeating a much larger enemy. Corporates should consider something similar: engage and invest in a chosen few to become fraud risk specialists, empowered to leverage the workforce internally and data externally, and keep abreast of the latest fraud trends, to become your corporate defence. By leveraging the data available to you internally, and mining it intellectually, those Spartans with laptops might just be your saving grace. INDUSTRY VIEW
hcooper@kroll.com znewman@kroll.com www.kroll.com
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HEN INTERBRAND released its 2020 list of 100 Best Global Brands earlier this year, just 41 of the companies included had been on that list in 2000. In fact, many of the brands on the list didn’t even exist back then. It’s proof that brand value isn’t just about legacy, it’s also about innovation, growth and putting the needs of your customer front and centre. The past couple of decades have seen waves of innovation like no other. With digital-native thinking and ambitious objectives, we’ve seen new organisations challenge the status quo in industries across the board. Fuelled by a determination to do better, we’ve seen early-stage businesses accelerate at a rate of knots, rapidly evolving from start-ups to “scale-ups”. Some may say that membership to the elite scale-up club is determined by annual returns, number of employees or perhaps the amount of funding received. While these are all important indicators of future success, the common ground to entry is that these businesses, typically in the technology space, have achieved impressive expansion and are continuing on an upwards growth trajectory. The UK alone is home to 33,860 scaleups. Contributing £1 trillion to the UK economy annually and making up half of the SME economy, the prominence of these types of businesses is showing no sign of receding. But it would be remiss not to acknowledge the impact Covid-19 has had on these organisations. Feedback we have received highlights the very real challenges many rising scale-ups are now facing as a result of the pandemic. Hailed as the future for so many industries and as the catalysts for change in the world, their potential now hangs in the balance of an era defined by uncertainty. We’ve seen a record number of technology start-ups file for administration since the start of lockdown, hampering their potential of ever reaching the scale-up stage. Other reports suggest that UK scaleups are facing a funding shortfall of up to £15 billion in 2020 as a result of the pandemic.
Building a solid foundation The next few months, and even years, will be make or break for many of these businesses. Some may think that because scale-ups have received funding, or are beyond this initial set-up phase, they are “safe”. This couldn’t be further from the truth, and actually, now is the time to equip these businesses to continue on their path to success. Look at how scale-ups such as Deliveroo have serviced our at-home dining needs when we were confined to our homes during lockdown, and how challenger financial services brands such as Monzo came to the support of many in financial need. These businesses are beginning to underpin the lives of many and it’s crucial to support the next chapters in their story. We believe unlocking their potential lies in rewiring these teams from a start-up to
Moving on up: equipping scaleups with the tools for growth
Romain Gauthier is customer officer, SAP EMEA North
a scale-up mindset when approaching back-office solutions. Understandably, scale-ups typically rely on more basic business tools, which have limited scope, functionality and scalability and find themselves reaching the limit of their capabilities rapidly. In many situations, these teams may still be dependent on tools such as Excel for increasingly complex tasks. Why does that matter? We observed that a solid financial structure, the ability to expand internationally in a matter of days, end-to-end employee management and real-time visibility over business KPIs, amongst others, are the cogs in the engine room – they can either propel a business to its next stage, or seize up and stop the whole operation. There are three key reasons why sophisticated back-end solutions are so crucial for these organisations. Firstly, while many start-up leaders think of selling the product, raising money and hiring the right people as key factors to sustain growth, they often don’t think of how the business will run when those milestones have been reached. This in-the-moment mentality is partly why they have reached the scale-up stage, but robust back-end solutions are going to be what sustains that growth. Secondly, the need to understand what is happening within the business in real-time has never been more important. Working in environments where it can take upwards of three weeks to provide sales data makes
critical fast decision-making, and therefore implementing critical business decisions, near impossible. Lastly, looking ahead to further investment, or a potential IPO, a certain level of structure and data insight is going to be required to make a compelling business case for investors and venture capitalists. Again, something not possible without a business built on sophisticated technology foundations, which provides accurate data with clear traceability.
Powering tomorrow, today While the merits of intelligent technology suites are clear, they have often been seen as aspirational for scale-ups. That should not be the case. At SAP, we realise we need to adapt our approach to make our worldclass solutions no longer a pipe dream. As Europe’s largest tech company, and as the inventors of enterprise resource planning (ERP), watching the challenges scale-ups are facing at this stage was a wake-up call. We need to do more to support these businesses. This is why we launched our Grow by SAP initiative – a programme designed specifically for scale-ups that provides all the essential back-office business requirements, from finance, to procurement, project management, core HR and business analytics with fast implementation schedules and minimum up-front financial risk. Importantly, seeing reports that highlight scalability and the ability to attract talent
as key reasons why European tech scale-ups are failing, we knew we needed to act now. We already have all of the solutions to solve these problems, and solving problems is what we do for our more than 440,000 existing customers in 180 countries. But it was on us to connect the dots between our products and initiatives to create a programme that truly adds value to this group of exciting organisations. We acknowledge that scale-ups present different challenges than perhaps the typical customers of SAP. They are the businesses of tomorrow, fuelling economies and powering our lives. As such, we’re taking a collaborative approach to working together, and even looking deeply at the way we function as a business ourselves to better partner with these types of organisations. Europe has one of the most exciting scale-up communities, disrupting industries from money transfer to streaming. To ensure they continue to flourish, it is our duty to sustain their growth through offering solutions that will underpin their future success. Powering the back-end with cloud-based, automated and scalable solutions will be the key to attracting the talent and investment required to propel these businesses to achieving their potential. INDUSTRY VIEW
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Navigating the shifting sands of today’s fraud landscape Nick Martindale looks at the new fraud threats businesses need to be on their guard against
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“For small and medium-sized organisations, the current environment of cyber-security is much like outrunning a bear. You don’t have to be the fastest runner, you just have to be faster than somebody else” – Jonathan Knudsen, Synopsys Simple steps to thwart cyber-criminals • Employ an IT support company. They should ensure you don’t make basic errors that would make it really easy for fraudsters.
for your website and social media, and change them whenever someone leaves the company (or after a developer has worked on the website).
• Use two-step authentication.
• Don’t rely on your employees to update their passwords regularly (they won’t). Force it through the IT system.
• Install anti-virus software. They vary in effectiveness, so research the options. • Make sure you know who has access to the passwords
• Get an independent specialist company to audit your IT security. The mistake
too many companies make is to get their IT support team to do the audit themselves. However, it’s not in their interests to point out their failings. • Don’t allow your employees to use public Wi-Fi networks. It can be very easy for a fraudster to set up a Wi-Fi network that looks legitimate, and then steal all your passwords.
HE ISSUE of fraud is rarely out of the headlines, and with good reason. Research by Action Fraud, the UK’s national reporting centre for fraud and cyber-crime, estimates that the cost of fraud in the UK in 2019 was £130-190 billion, with 65 per cent of that being business fraud. The same report stated that an average organisation should expect losses owing to fraud to account for between 3 to 6 per cent of turnover, although in some cases it could be as much as 10 per cent. Against the backdrop of a recession and the challenges of Covid-19 – both of which mean instances of fraud are likely to rise still further – this is something no small business can ignore, especially as small firms are arguably more likely than larger companies to be the focus for attacks, on account of having lower levels of security and knowledge of fraud prevention. Much of t he t hreat nowadays comes from cybercriminals. Research from insurer Hiscox in 2018 found a small business was hacked every 19 seconds, and Tamas Kadar, co-founder and CEO at online fraud prevention firm SEON believes things have got worse since then. “With companies and customers flocking to the internet during the Covid-19 pandemic creating a fertile ground for fraudsters, we estimate that these hacks have risen by 50 per cent in the past three months,” he says. “There may now be as many as 6,500 successful c yber- cr imes com mit ted against SMEs every day in the UK.” One cyber-threat that is on the rise is push payments, where fraudsters use social engineering tactics and impersonation scams to deceive consumers or businesses into
sending payments to fraudulent accounts. “Fraudsters circumvent checks and balances of financial institutions, such as manual review identification of unusual activity and other enhanced protections, to send seemingly legitimate requests for payments,” says Alastair Johnson, founder and CEO of Nuggets. This can be combated with the use of verified digital IDs, which don’t need usernames and passwords, he adds. Often employees are duped into handing over sensitive information which can then be sold on the “dark web” or used to ransom employers, warns Andrew Hollister, head of LogRhythm Labs. “Fortunately, many of the activities performed by a malicious insider can be detected and stopped by using a layered security approach,” he says. “This should include the usual security defences, such as network forensics, security information and event management, intrusion detection systems, and endpoint detection. However, it should also include security awareness training, policy enforcement, and auditing.” There’s also a risk of small firms being impersonated online, which can cause huge damage to the company’s reputation. “Fraudulently appropriated brands can be used across various mediums including mobile apps, social media pages, phishing pages, typosquatting domains [a mis-spelled domain name masquerading as a real company, designed to lure unsuspecting customers] and subdomains,” says Fabian Libeau, EMEA VP at RiskIQ. “When threat actors successfully impersonate a brand, damage to the legitimate organisation can be vast with consumer confidence irrevocably shaken. This is especially true in the case of an SME.”
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Why a digital approach can help SMEs boss it in today’s climate 67% The percentage of businesses wanting to invest more across all areas of technology Source: Sage
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O CALL 2020 challenging would be an understatement. Small to medium enterprises are feeling the impact of coronavirus, with lockdowns affecting regions across the UK. But they’re not giving up – they’re using technology to boss their businesses and take control. When work-from-home requirements were first announced, businesses had to adapt fast. Technology played a key role. Videoconferencing, accounting and finance solutions quickly came to the forefront. But as SMEs try to keep up with changes on an almost daily basis, they’re realising technology not only helps them survive but thrive. With the latest lockdown measures in place, digital will play an even more important role to help many businesses stay open. Investing For Recovery is a new report by Sage and research consultancy Capital Economics. It shows 73 per cent of SMEs have invested in technology since the pandemic began. But only 17 per
cent planned to do so prior to coronavirus. Meanwhile, 57 per cent are using digital solutions to manage their finances, accounts and people. Ella Jade is a perfect example of this. “We’ve invested heavily into digital to help us deliver a user-friendly and consumer-focused e-commerce platform,” says the co-founder of luxury affordable online furniture brand Roobba and Sage Accounting customer. “We’re also investing a great deal into our internal tech solutions for our supply chain, which, while it’s been disrupted during Covid, helps us stay in control of it as much as we can.” But one thing holding businesses back is money. According to the Sage report, 67 per cent want to invest more across all areas of technology. While the government has offered financial support during the pandemic, many SMEs don’t feel it goes far enough. Tax incentives have been called for to help businesses achieve their digital objectives.
One route SMEs could take is to reach out to Growth Hubs, led by the Local Enterprise Partnership (LEP), which may offer local grants with a technology focus. Moving to cloud subscription software can also help businesses save on shelling out lots of money in one go. And paying on a monthly basis can be more cost-effective. In fact, there are numerous reasons to move to digital. By using software to automate processes, time can be saved on data
Countering late payment Late payment is closely linked to fraud, not least as it can be hard to tell when payment stops becoming late and becomes something more sinister. According to research by the FSB, 62 per cent of SMEs have experienced either an increase in late payments and/or had payments frozen completely as a result of Covid-19, while 10 per cent report customers lengthening payment terms.
Covid-19 has made small firms even more vulnerable, as more employees now work from home. “These risks can come in the form of hardware and software vulnerabilities such as personal devices that don’t have strong antivirus or firewalls or security weaknesses in home Wi-Fi systems,” points out Michael Whitfield, managing director of CPP Group UK. “Alongside this, the physical separation makes employees more at risk of spoofing attacks, where a cyber-criminal impersonates a colleague to steal informat ion or f u nds. By usi ng
authentic-looking email addresses and signatures, email spoofing is becoming increasingly sophisticated.” The good news is that some basic measures can give small firms a decent measure of protection (see box). “For small and medium-sized organisations, the current environment of cyber-security is much like outrunning a bear: you don’t have to be the fastest runner, you just have to be faster than somebody else,” says Jonathan Knudsen, senior security strategist at Synopsys. “A small or medium-sized organisation that has put at least some effort
into strengthening their cybersecurity will likely deflect all but the most determined attackers.”But more traditional methods of external fraud are also alive and well. Attempts to trick people into passing on information such as account details can happen just as easily over the phone as over email, while bogus invoices can also fool busy business owners. “A common trick with untrustworthy suppliers is for them to double invoice, in the hope you won’t notice,” says Francesca Dowling, head of compliance at online business bank Amaiz. “This is because
Lynne Darcey Quigley, founder and CEO of Knowit, says small businesses need to take steps to spot any potential issues early on. “These include credit checking, running Companies House checks, validating main telephone numbers and websites and other public registrars, and assessing business risk through ongoing monitoring of their customers’ creditworthiness,” she says. “Crucially, firms must perform these processes before their first commercial transaction and then on a regular ongoing basis.”
entry, payroll and managing accounts. With time freed up, SMEs can focus on revenuegenerat i ng st rateg ies a nd improving the customer experience. And by generating real-time reports, businesses can make data-driven decisions that boost the bottom line. Understanding cash flow has never been more important. Taking a digital approach means businesses can stay on top of their finances and easily see what’s coming in a nd going out. smaller companies are less likely to have systems in place, such as purchase orders, which prevent this.” Invoice financing, while a valuable source of liquidity, is also open to abuse, says Jesse Chenard, CEO of MonetaGo. “Despite its enormous addressable market, invoice financing remains an antiquated, inefficient, and largely paper-based process,” he says. “Risk of fraud is most acute in double financing, invoice authenticity and tracking of underlying goods.” Blockchain te c h nolog y, wh ic h u se s a shared distributed decentralised ledger, can help here, he adds, by securely sharing data among participants and validating the authenticity of invoices. But it’s not just external threats that should concern small firms. Employees can also pose a significant risk. “People defraud their employers for numerous different reasons,” says Dowling. “It can be opportunistic, when they spot a way of making money and don’t think they will be found out. It may also be through malice, because they feel unfairly treated. Some
Meanwhile, managing the workforce becomes more effective – improved collaboration and easy shift management are two benefits of using digital tools. As businesses look to the future, going digital can help them keep moving forward. Now’s the time to use technology to thrive. At Sage, we’re here to support SMEs and help them boss their businesses. INDUSTRY VIEW
Learn more at www.sage.com people are simply dishonest, and think it is okay. There are also some people who get a thrill out of it.” It’s a good idea to take up references, including phoning prev ious employers, and compare dates with LinkedIn job histories, she says, to reduce the risk of hiring someone who may be looking for a way to attack a business from the inside. Failing to protect a firm against fraudsters can damage it in multiple ways, claims Michael Hatchwell, director at Globalaw. “First, in terms of financial loss which may cripple a business,” he says. “Second, where a major fraud involving the company could damage a company’s reputation and ability to do business in the future. “Third, if implicated criminally, a company’s director or key employees may face prosecution and criminal charges resulting in considerable distraction, costs and stress, even if the prosecution is unsuccessful.” With any one of these capable of putting a firm out of business, it’s time small firms made security a priority, even – or especially – in the current climate.
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New work, new danger There are plenty of positives to working from home – but the “new normal” has brought with it unforeseen pitfalls, and opportunities for bad actors to take advantage of. Business Reporter investigates the problems and solutions…
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VER SINCE the UK government introduced measures in March to stymie the spread of Covid-19, the number of people working from home has soared. In 2019, according to the Office for National Statistics, some 30 per cent of the UK population had worked from home at some point. But surveys last month show that, at the height of lockdown, that figure doubled. Not since the Second World War has a single event so dramatically reconfigured the working landscape in Britain. So much of what we took for granted before the pandemic – the ability to go into an office each day and work alongside colleagues, the freedom to meet with clients face to face – has been turned on its head. The average worker may be saving money on the commute, and some may feel their productivity has actually improved, but the all-important interactive environment that the workplace once provided is being experienced by fewer people. But as the pandemic has made itself an unrelenting feature of our day-to-day lives, we have been able to harness new technologies to great effect. Meetings can now be conducted via Zoom, Microsoft Teams or on the many other video-sharing platforms now considered indispensable to a functioning work environment. So too can timesheets be completed remotely, via phone apps, while project management software is gaining in sophistication. From a distance, our working lives appear to be getting easier. But therein lie a number of problems. Advanced communications technologies may have proliferated in recent years, and they may well be allowing us unprecedented levels of freedom to decide where we work and how we go about our work. But, says Howard Cooper, managing director at global investigations firm Kroll, working from home is “severely compromising many of the controls and processes usually in place to help mitigate these risks.” The technologies we use expose us to security risks, through breaches of communications devices, phishing, customer ID theft and more. These can prove
“As more digital channels for communications, financial transactions and the like become available, so too do the risks of fraud increase”
costly for businesses already experiencing a heightened since of prec a r iou sne s s due to t he pandemic. The predecessor of what we today call cyber-fraud has been around for at least as long as financial and telecommunications technologies have existed. The first illegal interception of a remote communications exchange was made in 1867, some three decades on from the invention of the telegraph. Techniques for fraudulently obtaining data have evolved as rapidly ever since, and with similar degrees of ingenuity, as the technologies they seek to exploit, from the telephone call to the email to today’s Zoom session. The internet, perhaps more than any other invention, has democratised the opportunities to commit fraud. It is now easier and cheaper to do than ever before, and it can be done on a scale that is likely unprecedented. We hand over vast amounts of personal data to businesses every day, whether it be via our social media profiles or through our online shopping habits. We expose ourselves, expecting to be protected, but all too often this is not the case. And now, with Covid-19 forcing us to become even more dependent on remote communications technologies, this risk increases further. Our working lives may, in many respects, seem easier and freer, but are they necessarily safer?
Video conferencing apps Zoom and its competitors have become synonymous with the new era of remote working – and, indeed, of remote socialising. In April this year alone, uptake increased 30-fold, and it quickly became one of the go-to
video conferencing apps. But reports soon began to emerge of its security flaws. End-to-end text messaging was encrypted, but video calls were not, meaning that hackers could gain access to sensitive conversations. And if data was being transferred during these calls, it would need to travel over multiple public and private networks. The fact that each of these increased the threat of interception provided additional security concerns. Zoom, and others, have since responded by encrypting all video calls. It has also pledged not to exploit user data, following concern over privacy policies that seemed, initially at least, to allow the company to do whatever it wanted with that data. But, with all video conferencing apps, unless they are protected by military-grade defences, there remain weaknesses. For a start, video conferences are generally archived, and unless those archives have heightened security, they too can be penetrated by hackers. So too is there the risk of “data radiation” – the radiation that all electronic devices give off, and which can also be intercepted.
Ransomware Most businesses are by now aware of “ransomware”, a computer virus that “locks up” or encrypts files and databases, forcing an individual or company to pay the person behind the scam to unlock them. But while they may now understand the threat it poses, that wasn’t always the case. Some have quipped that these attacks, now a multi-billion pound industry, has spread as virulently as Covid-19 over the past nine months. In Germany, reports emerged in September that a woman had died after her ambulance was re-routed to a hospital further away, because a nearby hospital was dealing with a ransomware attack. The increasing efficacy of ransomware stems from a number of interconnected phenomena: gangs tend to operate in countries with weak cyber-security laws, and are thus able to go about their business with comparative ease; there’s also
a willingness among victims of attacks to pay up, rather than seeing payment of ransoms as a last resort; and general lapses in cyber-security are common, both on the part of companies that provide software with too many security holes, and the businesses that use them without first having a good understanding of encryption and related security methods.
Customer ID theft Customer ID theft is nothing new, nor is the financial and reputational damage it can do to an individual or company. Think back a few years to when telecoms company TalkTalk failed to inform more than 4,500 customers that its data, including bank details, had been stolen, and was subsequently hit with a record £400,000 fine. But with cyber-security suffering as a result of growing numbers of people working from home on personal devices, the threat of ID theft increases. How do businesses know that the people accessing their databases remotely aren’t fraudsters using stolen ID? How can identity verification solutions meet the needs of an increasingly complex working landscape? It might be that all companies need to adopt sophisticated vetting procedures for their staff – face verification, for example – even if it does seem alarmist. It may take more effort, and more convincing, in the short term, but the inconvenience will soon be outweighed by the long-term gains of enhanced security.
Bring your own device The new trend for working from home has, unsurprisingly, led to greater usage of personal devices, whether laptops, PCs or smartphones. But this comes with a wealth of problems that fraudsters could easily exploit. The process of copying data from work to personal devices presents an opportunity for hackers to get hold of sensitive information, while those personal devices may have weak – or entirely lack – encryption software to protect the data once it’s on there. There is also a
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Skim city: a short chronology of fraud through the ages 300BC Greek shipping merchant Hegestratos attempts to con insurers by sinking his boat full of valuables, and making a claim on the supposedly lost content, which he had in fact kept. 1696 Sir Isaac Newton becomes Warden of the Royal Mint, and into his crosshairs comes William Chaloner, a skilled forger of coin. A cat-and-mouse game ensues, but by 1699, Newton sends Chaloner to the gallows. 1821 Scottish General Gregor McGregor claims to have conquered a small island off Venezuela. He sells houses to investors, in some cases exchanging Sterling for a fabricated “local currency”. But the island never existed, and those who flocked to him discovered the fraud only too late.
higher chance that data can be lost, particularly if the employee isn’t au fait with back-up processes and if the device is a shared family one, rather than personal. If devices have unsupported or out-of-date software, hackers will be able to easily exploit known vulnerabilities, and if the employee doesn’t have the wherewithal to spot signs of breaches, the hacker will be able to pull out substantial amounts of data over time. The UK government has recommended that companies adopt specifically tailored BYOD policies to guard against these threats, which includes opening up a dialogue between company and employee over how much control the company can have over staff personal devices. Once there is clarity and buy-in, companies can go about enforcing technical controls: types of access, minimum standards for the platforms that can be used, how frequently they are updated, and so on.
Digitalisation It follows that as more digital channels for communications, financial transactions and the like become available, so too do the risks of fraud increase. It’s become something of a cat-and-mouse game: techies celebr ate w it h jubi l at ion t he development and rollout of a new digital platform or piece of software, and fraudsters quickly hatch ways to exploit it. The problem is that if we compare the pre-internet age with today, we are far less prepared to handle the multitude of types of fraud that now exist. We don’t appreciate the risks, and despite being warned over and again to regularly change passwords, to ensure we have up-todate anti-virus software and that our communications are encrypted, we still don’t quite get it. This has enormous implications for companies who have been forced to delegate responsibility for security to
1920 Arch-swindler Charles Ponzi rakes in around £12.5 million from his diversionary fraud schemes – so successful are they that the “Ponzi scheme” is eventually named after him. 1925 With French authorities concerned about the upkeep of the Eiffel Tower, Charles Lustig adopts the persona of a government minister and almost – but not quite – sells the famous monument to scrap metal dealers. 2015 FIFA is embroiled in scandal after it emerges that top officials took bribes over the sale of Copa America and various television rights. The episode led to the downfall of FIFA’s two top men, Sepp Blatter and Michel Platini.
“Techniques for fraudulently obtaining data have evolved as rapidly, and with similar degrees of ingenuity, as the technology they seek to exploit”
employees who now work remotely, and who probably aren’t keyed into the prevalence of cyber-threats.
Solutions Cooper notes that advance action on fraud “is far more preferable than retrospective investigation and remediation.” Yet despite this, “prevention just isn’t enough of a priority for many, with a great number of organisations in turmoil. Budgets set in January are a distant memory, supply chains are under significant pressure, workforces are reduced or held in the limbo of furlough, and pressure on cash flow has never been greater.” Yet there are technologies that can both improve efficiency and decrease the risks of fraud. Among them is robotics process automation (RPA), whereby a software robot, or “bot”, effectively carries out the business processes a human normally would – it can type, open applications, transfer files and carry out other tasks that emulate human work. In automating such processes, humans are able to spot vulnerabilities as they go, and thereby lessen the risk of fraud. So too does it decrease the risk of human error, as well as providing a tool for reviewing myriad processes – financial transactions, for example – in a short space of time, and in doing so, picking out weaknesses in the system that hackers could exploit. Another technology gaining traction for its fraud-prevention qualities is blockchain, the digital ledger for financial transactions that has built-in anti-fraud mechanisms. Users can see the history of transactions, making fraudulent behaviour easier to spot, while access and identity management are tightly controlled. Those blockchain networks that are permissioned (not all are) can furthermore reduce the risk of outsiders gaining access.
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The future of work lies in organisational intelligence How effective digital transformation is making information capture a critical business competency
“By 2022, 90 per cent of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency” – Gartner 2017
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CCORDING TO new research published by PFU EMEA Limited in the Fujitsu Image Scanners Organisational Intelligence Research Report 2020, 86 per cent of European businesses struggle to manage the amount of data in their business, with 35 per cent still lacking even a plan for digital transformation. With many organisations identifying gaps in both skills and even their knowledge of where to begin, it is apparent that the perceived scale and complexity of these tasks is an issue.
advanced analytics to synthesise available data into actionable insights that drive better business decisions. Many will begin at what we at PFU EMEA call “first step transformation”. Automating the digitisation of physical-format data can fuel progress through accessibility, ensuring the key building blocks are in place for future stages to occur at a fast pace, in an efficient manner.
Low-risk opportunity Effective scanning and information capture becomes a critical first step towards effective and efficient information management. The role this technology plays is widely acknowledged and trusted by companies across Europe, making it a low-risk route to both action and progress. In fact, 54 per cent of the organisations in our research already make use of scanners as an enabler for digital transformation and view it as the starting point for long-term company efficiency and growth. It is also notable from the report that 80 per cent of organisations reported seeking external expertise to help them realise their digital transformation vision. Experienced partners are a rich source of knowledge about available technology as well as wider knowledge domains such as effective information management. They can also bring confidence to an organisation’s decision-making processes, by ensuring it has followed robust solution evaluation, development and deployment practices.
Legacy issues and future problems The report reveals that, while 50 per cent of organisations currently engaged in digital transformation said growth was a key driver of their efforts, many still face the challenges of data being siloed in discrete collections of products, processes, employees, profit centres and tasks. Micro-challenges associated with this type of setup include: • I nformation not being readily available • The difficulties of sharing information with others • Laborious processes required to obtain information This has far-reaching impacts – opportunities generated by the use of advanced analytics, machine learning and the adoption of artificial intelligence (AI) all rely on the data within an organisation being accessible, consistent and secure. According to a 2017 Gartner report, “By 2022, 90 per cent of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency.” When data underpins the platform for change, data management becomes a mission-critical concern.
A new perspective: organisational intelligence To escape the stymying effects of limited data access, a new way of thinking is essential – and an organisational intelligence-led approach can provide just such a perspective. Organisational intelligence is the capacity of an organisation to derive maximum value from the data it has access to – through creation of flexible knowledge pathways that add value at every stage to every employee. When an organisation is viewed and designed as a single integrated knowledge
Organisational intelligence – the future of work
Organisational intelligence 1. First step transformation
2. Knowledge transformation
3. Business transformation
“What is digital transformation?”
“How can it apply to my business now?”
“How can I grow my business?”
management system, design thinking allows data to become a readily accessible source of competitive advantage, both tactically by improving operational efficiency, while also providing the insights that can lead to better strategic decision making.
Simplifying the road to business transformation Recognising the perceived complexity of this topic, PFU EMEA has created a threestage maturity matrix aimed at giving organisations an at-a-glance understanding of where they sit in their digital
transformation journey, enabling them to quickly decide what the appropriate next steps may be. Business transformation is of course the ultimate goal of successful digital transformation. Through intelligent application of data come insights that can revolutionise customer experience and generate new business models with the potential to disrupt existing markets or even create new ones. Getting there, however, requires the transformation of knowledge management processes themselves, making use of
It is clear that data-driven insights are becoming the critical assets, and effective information management and analytics the core business competencies, of the future. For those organisations that equip themselves to effectively manage information by adopting an organisational intelligence-led approach, transforming their knowledge infrastructure is a critical step towards delivering the robust insights which are the foundation for business transformation decisions and sustainable competitive advantage. INDUSTRY VIEW
To download a copy of the full report go to www.fujitsu.com/uk/oi2020 To discuss how information capture can support your digital transformation journey, contact PFU EMEA Limited at intelligence_report@uk.fujitsu.com
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In times of crisis, helping your employees look after their mental health is a no-brainer Sheltering their employees from the current storm will benefit organisations in the long run, writes Rob Stephenson
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S WE travel through the pandemic, we hear a number of home truths on mental health: “We’re all facing the same storm but are in very different boats”; “It is a marathon and not a sprint, yet many of us have been sprinting for six months”; “Are we now working from home or are we living in the office?” It is also true that 100 per cent of us will know what it is like to struggle with our mental wellbeing as a result of the pandemic. The government has changed its guidance on returning to the office, and we are heading into the long winter months ahead with the additional concern of the economic impact of lockdown biting as much as the cold weather. The mental health of employees has been severely tested over the last months due to isolation, increased stress and anxiet y, uncertainty and risk of burnout.
Many employees have been well supported through this, as companies ramp up their efforts on mental health and wellbeing, but many others have been left to fend for themselves. Checking in with employees and finding ways to ask how they are feeling is important for employers, alongside creating cultures where people feel that they have permission to prioritise their wellbeing. Prioritising sleep, exercising regularly, scheduling breaks in the day, inserting a buffer between work and family time, and working hard to connect with people who make them happy are good approaches employees can be advised to take, to mitigate the enormous strain of this hugely stressful period. But it’s important to recognise that employers also have a duty of care towards the people who work for them. As we move into
the next phase of the pandemic in the UK, organisations cannot afford to ignore the mental health of their people. Because, once we eventually make it through this crisis, employees will remember how those employers treated them, and how they made them feel. As the saying goes, a happy worker is a productive worker – improving mental wellbeing and resilience capacity isn’t just about the people involved, it’s also one of the biggest performance gains we can make right now, in a period where businesses will need them the most. Whatever you are doing as a business leader right now, you cannot afford to ignore the wellbeing of your people. Rob Stephenson (inset left) is a mental health campaigner and consultant, founder of the InsideOut Leaderboard and CEO of FormScore
Work is changing: it’s about time
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VERY COMPANY is different, but in one form or another, distributed work is here to stay. While the shift was always coming, Covid-19 has shown us that we can do it and it works. We can, however, make distributed work better.
Breaking the mould As far as any employee can remember, we’ve been bound to an hours-based model of work – clocking in and out. This has kept us distracted with the “how” of getting things done, rather than what we are actually achieving. Expecting employees to be “logged on” for fixed office hours is a broken model. And asking them to grind through tasks with little real impact on business objectives feels like a waste of the time we have. We need to break out of this tradition and refocus on output – by looking at what we’ve done and whether it really matters to the business. For this to be successful, we must help people focus on high-impact tasks and set them free to achieve their goals. This includes methods and timelines, but also the tools.
The missing link: the right tools Currently, there are lots of different productivity and collaboration tools that are
A platform of trust
“Asking employees to grind through tasks with little real impact on business objectives feels like a waste of the time we have”
If we are going to empower people to work in their preferred ways and with their preferred tools, we must also trust them. Today, employees are innately more aware of the tools that are available to them in the world outside of work, as demonstrated by a recent survey that found that 41 per cent of UK workers have used WhatsApp for work purposes. Once employees feel they are trusted to manage their own time and tools to reach their business goals, we will have cleared a path to optimal output, and these results in turn will lead to an increase in trust from their managers – it’s a virtuous circle.
An opportunity for change stitched together. We have the technology available, but we need a platform that brings these services together in a coherent manner. This is a huge challenge for people to get right, as they bounce around from application to application trying to get their work done and collaborating with distributed colleagues and partners. We’re fortunate that our own product was built for distributed teams, and that’s why, at Dropbox, we are becoming a virtual first company, where – for the majority of
the working week – employees will be working remotely, using our own technology. As we gain an increasing understanding of what our users are experiencing, we can continue to evolve our products and practices to help people focus, stay organised, and collaborate in this new environment. Right now, we have the incredible opportunity to build the products and tools we need in order to work in an enlightened way in this new, distributed world of work.
Thinking of work with the traditional mindset of hours spent at a desk is outdated and broken. We have an opportunity and obligation to change the status quo and empower people to do their best work. Let’s not waste this golden opportunity. INDUSTRY VIEW
Andy Wilson is global head of media technologies at Dropbox To learn more visit https://experience. dropbox.com/flexible-future
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The digital transformation of the hybrid workplace T
H E PA N D E M I C h a s changed working patterns for good. Research by the British Council of Offices found that 46 per cent of office workers blend home and office working, while according to the ONS more than a quarter work exclusively from home. This blended way of working has meant businesses have had to adapt, and fast. Having a digitisation strategy has become top priority for many who realise they must evolve to maintain competitive advantage. In fact, 27 per cent of global executives say digital transformation is now a matter of survival.
What does the hybrid future look like? Being digitally agile to support hybrid working may no longer be a choice but a necessity if companies are to remain fully operational under today’s everchanging Covid restrictions. Talent is now being onboarded virtually, customers are being won remotely and teams need to be better connected than ever, no matter their location. On the flip side, remote working isn’t for everyone. It’s within our nature to prefer human interaction, while some business is better done in person, safely. But in or out of the office, today’s workplace is no longer somewhere you go, but something you do. An omni-channel structure where employees can simply and securely connect from any location and through multitude means – such as video calling, chat or cloud telephony – to suit the needs of the business and its employees. This means moving legacy, on-premises technology to the cloud to turn your business into an agile, digital-first operation that can support a remote, flexible workforce – by no means an easy feat. But what the pandemic has shown is how customisable cloud technology is, allowing companies to adapt swiftly to changeable environments. Businesses can quickly scale back when resources aren’t used, or accelerate in line with changing
demands, all while supporting a geographically diverse workforce. Business cont inuit y remains robust, the customer’s experience is uninterrupted, and even enhanced, and employees stay productive even in an everchanging world. We’ve seen these benefits in the companies we’ve worked with. Recently we partnered with the British Red Cross to help it swiftly adapt to the demands of the pandemic by implementing a world-class cloud contact centre. Executed within a tight timeframe, the solution was simple, scalable and easy to use. It is enabling the 100 geographically dispersed and remote British Red Cross volunteers to handle up to 2,000 enquiries a day from any location, without complexity. Calls are directly routed to volunteers’ home phone or mobile via Olive’s cloud call centre platform, with the ability to rapidly scale up if needed. A separate support line was also set up to look after volunteer wellbeing. Businesses have reactively experimented with cloud technology in the wake of Covid-19 to ensure their survival and continuity, and many considered these as temporary adoptions to an unexpected crisis. Thankfully the majority, as we’ve seen with the British Red Cross, have come through the pandemic with a desire to build an agile, scalable, digitally led infrastructure that’s resilient to change. So how do you do this?
the transformation roadmap, or confusion will occur. What it can’t be is a simple sticking plaster for a short-term problem. We saw a lot of organisations during the height of the pandemic swiftly setting up what they hoped to be temporary solutions, using whatever technology they could to enable their employees to work remotely under the UK government’s Work from Home directive. But with hybrid working now here to stay, the future workplace requires more thought and planning to support its long-term evolution.
Culture shift Starting your digital journey Your business goals are a good starting point. Consider how automating your capabilities will help achieve these. Are your goals to gain competitive advantage, ensure remote employees are better connected, or both? Or do they stem from a need to better serve customers through a more intelligent contact centre? Whatever the objective, digital journeys must have meaning. They need to be fully integrated with the company’s purpose, with the entire organisation clear on
But technology is only half the solution to building a hybrid workplace of the future that reaps the rewards of flexible working – which, in some cases, is reported to increase productivity by more than 10 per cent. Successful digital transformation also requires a cultural reshape, an employee support framework, and a new style of leadership – especially when you think of the world at large and the fact the majority of employees have never worked from home. Even here at Olive, where we’ve always operated a flexible
workforce, we appreciated the impact of 100 per cent home working through lockdown, and launched a series of employee support packages including tips on productive home working, a financial support line and cognitive behavioural therapy. There’s also the assumption that managers and colleagues are more easily and readily available when working remotely, as they’re outside the normal day-to-day office distractions. Gone are the visual cues of the office that gauge when to hold off from approaching others – such as the head down at the desk, on a call, or having just finished a long meeting. Leaders become on-demand managers responding to every voice or video call, while colleagues feel they need to join every Teams meeting or reply to email instantly, which ends up being unproductive. Having clear rules and best practice guidelines for remote working and virtual meetings is just as important as having the right technology infrastructure in place. In fact, according to Gartner, 46 per cent of companies say culture is the biggest barrier to scaling digital transformation.
But for digital transformation to succeed, effective user adoption must occur. And this requires the entire organisation to be aligned, engaged and on board with the technology and the new way of working to reap the rewards. Appointing champions for change can help – communicating the company vision and purpose for transformation, keeping employees updated on progress, and delivering online training collateral on the new cloud communication systems. Digitally adapting to support the future blended workplace can throw up many technical and cultural challenges, as with any change process. But with strong leadership, a clear corporate vision and a solid strategic foundation, the business will soon have an agile and resilient digital workplace that keeps its teams connected and ready for whatever the next phase of the “new normal” brings. INDUSTRY VIEW
Gráinne Gormley (left) is enterprise sales director at Olive Communications UK www.linkedin.com/company/ olive-communications-uk www.olive.co.uk
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Five ways the contingent workforce has evolved post-Covid R ARELY HAS the future of work looked so different, so quickly. In less than a year, the business world as we know it has completely changed. But not all change is negative. Elements of the workforce have arguably evolved at a faster pace than would have been possible pre-pandemic. In particular, the shift in corporate mindsets around remote and contingent workforces have seen a significant change almost overnight. And while it’s impossible to predict how the world of work will look in the future, there are a number of trends we’re seeing that will reshape the workforce.
An evolving workforce mix Agility, transformation and a need for remote working in the current economy have diversified companies extensively. Each of these elements are something contingent talent can bring to the table, so it’s perhaps no surprise that more businesses are tapping into these resources. However, embracing this external talent pool does require better
following the shocking events of 2020. A truly inclusive workplace can result in a work environment that welcomes and nurtures all talent, and any D&I strategy should extend not just to permanent employees but also to the contingent workforce. We’re generally seeing HR professionals take a more active role, resulting in a more holistic and human approach to how contingent workforces are managed.
Direct sourcing and contingent RPO workforce planning. Corporate needs and the composition of the workforce have changed, and workforce plans increasingly need to reflect the delivery of strategic tasks and SoW outputs, not just headcount.
Globalised contingent talent pools The greater acceptance of remote working has broken down many barriers, and globalised contingent talent pools. There are currently around
78 million freelancers worldwide, with numbers set to continue growing. With more employers recognising that they don’t need their staff sitting together to deliver results, we certainly expect to see firms focus on sourcing without borders, where key skills are valued over location or travel abilities.
Diversity and inclusion While it’s been on the business agenda for a while, diversity and inclusion has become a priority like never before
Unsurprisingly, the pandemic has brought about a need for many organisations to reduce their costs while improving the quality and fit of talent, resulting in a move towards direct sourcing. What’s also of particular interest is the growing trend towards employers being more visible in sourcing elements of their contingent workforce, with many looking in the direction of contingent recruitment process outsourcing (RPO) solutions to further support their own direct sourcing efforts.
Rethinking your employer branding Savvy employers that are already recognising the increased value of the highly skilled extended workforce have begun to reconsider how they adapt and leverage their employer branding to attract higher quality, flexible non-employee talent pools – and it’s a trend that is set to continue in the immediate future. While these future workplace trends can present exciting opportunities, each element requires attention that will further stretch human resources and talent acquisition teams. Now more than ever, a joined-up approach to contingent workforce management is needed – and that’s something that an advanced managed services provider, such as Guidant Global, can deliver. INDUSTRY VIEW
Brian Salkowski is chief operating officer at Guidant Global bsalkowski@guidantglobal.com www.guidantglobal.com
How Covid-19 can drive safe digital insurance transformation A “With Covid-19 impacting the industry, automated risk analysis is a strategic necessity for safe digital transformation” – Christian Van Leeuwen, FRISS
LMOST 20 per cent of insurance claims contain an element of fraud, according to a recent FRISS survey of insurers from 52 countries. That’s a high number. Insurance is founded on honesty, and most policyholders are honest; those who aren’t drive up premiums. Fraud cannot be accepted as a cost of doing business – as Celent analyst Marty Ellingsworth says, “Fighting fraud is not a strategic competitive advantage. It’s the right thing to do.” And with Covid-19 impacting the industry, automated risk analysis is a strategic necessity for a safe digital transformation.
Covid-19 insurance trends Covid-19 has left us with the worst economic crisis in living memory, and the effects will be long-lasting. As government support tapers off, the anticipated increase in unemployment and economic uncertainty will put more
pressure on households and businesses. That will give rise to an increase in insurance fraud. Fortunately, most insurers realise quality data and real-time analytics can help solve the problem. The survey shows Covid impacting insurance companies in three major ways: • Increased workloads • Fewer inspections because of remote working • A n increase in suspected or proven fraud
While fewer claims have been made since the pandemic, insurers are also reporting more fraud. The schemes are similar, but people are committing fraud earlier due to anticipated financial problems.
The need for real-time fraud checks Covid-19 has also forced organisations to focus more on digitalisation and reducing costs. A more digital
process without fraud checks can leave insurers exposed. A recent example was a tattoo parlour that reported a break-in, with a lot of cash stolen. The amount represented a lot more than the shop’s normal turnover, which real-time detection can flag. Such proactive alerts that are based on events and data need to be part of your digital process – they can help streamline the workload, reduce the cost of claims
and prevent payout of fraudulent claims. Consistently applied, they’ll help you fast-track genuine claims while freeing up time to investigate suspicious activity.
Leverage the potential to drive trust We all hope the impact of coronavirus will soon fade – however, the economic fallout will last for a long time. In a survey by the ACFE, 92 per cent of respondents
expected an increase in fraud over the next 12 months. As insurers drive digital change, it is important they remember to include fraud prevention as part of their digital toolkit. We see insurers moving towards the real-time monitoring of risks and fraud and proactively monitoring policies and claims throughout the lifecycle, to make sure they can run a healthy portfolio. We are working closely with our customers to keep risk and fraud schemes relevant and up to date – and we’re proud to note that last year our customers were able to save more than $1 billion as a result. So let’s not wait for what Covid brings us, but proactively start fighting fraud. Your honest customers deserve it. INDUSTRY VIEW
Christian van Leeuwen (left) is CTO and co-founder of FRISS Christian.van.leeuwen@friss.com www.friss.com
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What’s next for HR? T Laura Schroeder is head of brand at Personio
HE PANDEMIC has shaken up the world of work. In this period of unexpected and unprecedented change, during which many organisations have had to rethink the way they operate, HR teams have been catapulted into the spotlight. On top of their regular responsibilities, HR professionals have had to respond to the crisis in different areas, such as administering furloughs, keeping remote teams connected and creating return-to-office plans. By acting as a strategic partner throughout the pandemic, human resources has proven itself to be the backbone of businesses, especially during crises. To find out more about the impact of Covid-19 on businesses and their people strategies, and discover what lies ahead for HR teams, we surveyed 500 HR managers in the UK. Here’s what we found…
HR has played a vital role in helping businesses adapt As businesses reeled following lockdown earlier in the year, HR was critical to helping them adjust to the new reality. Eight out of 10 HR managers said HR has been integral to helping businesses successfully adapt to the new normal, while nine out of 10 rated the function’s response to the crisis as “good” or “very good”.
Now, as organisations begin to recover, 68 per cent of respondents expect human resources to have more responsibility, and they also expect it to continue to play a pivotal role in areas such as mental health (45 per cent), implementing new work initiatives (37 per cent) and long-term planning (33 per cent).
HR has become more strategic during the outbreak The crisis has also given HR teams a unique opportunity to demonstrate what they’re best at: helping businesses make strategic
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as well as more agile and flexible to stay ahead in the future.
The right HR solutions and data are critical to success
decisions when it comes to their greatest asset, their people. HR has added strategic value to the business during the pandemic, say 71 per cent of HR managers – with the same percentage saying the HR function has been more closely involved at board level. Not only that, but HR managers are keen to continue playing this strategic role in the future – 80 per cent of them agree that it’s important for HR to maintain the strategic role it played during the outbreak. Meanwhile, a third point out that it’s vital that the profession becomes even more strategic
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It’s clear that an empowered, strategic HR is critical to business agility in times of crisis and beyond. However, in order to work strategically HR teams need to free up time that might currently be spent on admin processes, and digital solutions can make all the difference. More than half of HR managers reported that they lacked the data and tools needed to support the business effectively during the crisis, whereas HR teams supported by digital solutions were not only more effective, but also better able to put recovery plans in place. HR teams will be critical to supporting the return to the office and helping their organisations navigate the period after lockdown and beyond. Given the uncertainty ahead, organisations should act now to enable the HR function to operate effectively and strategically in the post-pandemic workplace. INDUSTRY VIEW
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November 2020
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Employee fraud: can technology tip the balance in favour of investigators?
P
EOPLE HAVE always committed fraud and always will – and some could be your employees. However, the tools have changed, particularly in the past decade, and technology has multiplied the opportunities, resulting in an exponential increase in cyber-crime. On the flip side, fraud investigators have many more sophisticated IT tools to prevent and detect this. So who will win the ongoing fight against fraud?
Why recruitment processes can’t eliminate employee fraud Any robust fraud prevention strategy must encompass both the human and technical sides of fraud. Studies suggest that people fall into three equal groups when it comes to committing fraud. A third are completely honest and will not perpetrate fraud whatever the circumstances. Another third will be open to committing fraud depending on the circumstances. The final third comprise the “rotten apples” who will always seek to defraud their employer.
Sifting out the rotten apples Organisations should always seek to employ the first third and not the last third – but clearly it’s not quite as simple as that. A well-designed recruitment screening process can remove rotten apples by confirming key dates for a candidate’s employment and education history, seeking proof of qualifications, and taking up verbal references (which may reveal more than a formal process). Explanations for gaps in work or education history should be sought, and of course criminal record
50% The percentage of employees who may be likely to commit fraud in the workplace Source: FTI Consulting
checks carried out where appropriate or allowable. None of this will identify the middle third, who by definition appear to be model employees until certain circumstances occur. According to the fraud triangle theory, these circumstances arise when two of three elements are present: for fraud to occur, the theory goes, two of three elements (pressure, opportunity and rationalisation) should be present. Most of us believe we would never commit fraud but there may be a certain point in someone’s life, or a set of exceptional circumstances, where that may change. Triggers for pressure could include an expensive divorce, serious illness in the family, or a costly habit or addiction. The resultant pressure could arise years after the employee is hired, so the recruitment screening process will never identify it. The higher an employee rises through the corporate ranks, the greater their opportunities tend to be and the more danger they represent. They have won colleagues’ trust (“I can’t believe he would have done that – we worked together for 15 years. I even went on holiday with him!”). They can commit the organisation to major transactions and know the controls in place – and the weaknesses in those controls. All this creates an opportunity that, combined with the right pressure, can lead someone from the middle third to commit a fraud. This example shows why technology is an essential complement to human anti-fraud activities. Here, a technical solution is required to catch any signs of fraudulent behaviour or red flags that weren’t picked up by the recruitment screening process.
The power of artificial intelligence to detect fraud Artificial intelligence, or AI – defined as “computers acting in ways that seem intelligent” – has been in commercial use since the 1970s in the form of rules-based expert systems. But until recently, the application of AI was constrained by computational power and data availability. Those constraints are now gone. Modern, cloud-enabled AI can operate in real time or close to it. It can concurrently analyse transactional data alongside, for example, chat room or email communications and customer relationship management systems. With algorithms tuned for organisational specifics, more fraud can be detected faster, and with less human involvement. But the aim isn’t to engineer humans out of the equation: it’s to create adjoined networks of humans and computers “acting in ways that seem [even more] intelligent.” The objective of identifying more fraud must be balanced against the numbers of machineidentified false positives requiring human resolution. With sufficiently large data sets, various permutations of machine learning become available and relevant, and promise to make analyses ever more effective. Advanced AI solutions take advantage of both database and textual information from internal and external sources. Freely accessible sources, such as the UK’s Companies House, can verify against reference data. A technique used as part of the FTI Augmented Investigations® capability automatically identifies and acquires data about entities mentioned in, for example, adverse media reports. By iteratively acquiring information on companies and their
directors, and then those directors’ other company affiliations, and so on, a network of related parties is created, and can then be linked to internal information. Graph databases, made famous by the Panama Papers data breach, reveal relationships between entities. As well as presenting data visually for human review, these can mathematically identify key participants within a large group, given a sufficiently comprehensive dataset. Focusing narrowly on specific problems allows for more efficient identification, but may miss variants, leading to false negatives. Conversely, tools that aspire to identify fraud more broadly will create more false positives and require more human engagement to resolve alerts – initially, at least. It’s easier to use technology and data to prevent fraud than to catch it. Employee onboarding tools should make the most of available reference data and well-designed risk measures. Like the pendulum on a clock, fraud cannot be overcome without technology powering it on one side and human analysis of data and behavioural patterns on the other. The swing from one side to the other makes investigation teams function as they should, with each element complementing and enhancing the other. INDUSTRY VIEW
Andrew Durant is a senior managing director, forensic accounting services; Nick Hourigan is a senior managing director, data & analytics at FTI Consulting andrew.durant@fticonsulting.com nick.hourigan@fticonsulting.com https://ftiemea.to/LinkedIn