APPLYING THE 80/20 RULE TO TELECOM FRAUD

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. 

PROTECTING THE CFO – THE SIMPLE SOLUTION TO REVENUE LOSS THROUGH FRAUD

Irrespective of a communication providers’ size, a CFO or Finance Director’s nightmare is to have to explain to his executive team, to his shareholders, to his/her own customers, even the general public in some instances, why they didn’t detect an ongoing financial loss or couldn’t prevent a sudden fraud hit.

The increase in scale and complexity of fraud types around the world creates situations of genuine uncertainty for operators and in turn, their financial controllers. No operator wants to constantly face the threat of being attacked by fraudsters and of having hundreds of thousands or even millions of dollars wiped off their bottom line in a single incident.Yet we see this happening, a lot.

But what price is worth paying to stay protected from financial losses?

Smaller Operators more at risk

Losses directly attributable to fraud and revenue leakage can range from 0.5% of gross revenues all the way up to 15% in certain cases, according to a Gartner report. International Revenue Share Fraud, the deadliest of all fraud types, costs the industry in the region of $6.1bn a year, roughly 20% of all estimated communication fraud.

Although the types of financial risk to which operators are exposed are essentially the same, owing to the global nature of telecommunications, the smaller operators are at a clear disadvantage when it comes to managing risk and preventing major losses. They simply don’t have the experience, the maturity, or the resources to get losses fully under control.

Whether traditional MNO, VoIP, fixed-line carrier or MVNE/MVNO, the price point at which they should seek to acquire loss prevention technology or related services is a critical deciding factor. So, the case for simple and cost-effective tools to de-risk their business becomes a compelling one. There has never been a better time to promote a low-cost technology proposition to the global telecommunications market, even for incumbent operators seeking to drive down supplier costs.

At XINTEC we can help de-risk a business in a very simple and cost-efficient way with a suite of products that are flexible, adaptable, quick to install, and able to deliver measurable results fast.  

THE VALUE OF NRTRDE-OUT RECORDS IN THE FRAUD DETECTION PROCESS

Roaming revenues have been declining for several years now, and some CSP’s have realised that being accepted as a preferred roaming partner in their home country can generate important revenue to replace that lost through declining outbound roaming settlements.

A HPMN will normally have a choice of several VPMN’s in most countries their customers will roam to, and they have the ability to steer their customers towards a preferred VPMN when roaming. The decision on which roaming partner will be selected as their preferred VPMN will be based on a number of factors, for example NRTRDE compliance, network quality, inter-operator tariff (IOT) discount agreements, etc.

In most countries now, the services provided by all VPMN’s is reasonably consistent, so a service differentiator should be explored to provide an additional level of service not offered by the other in-country CSP’s. A relatively simple value add is to evaluate NRTRDE-OUT records for visiting roamers and provide immediate advice to the home network of any obvious fraud or misuse. While it is accepted that (in most cases) NRTRDE records will be delivered to the home network within 60-90 minutes, the earlier suspicious activity is notified, the sooner financial loss can be avoided.

The opportunity to add value in this way will be limited as more operators implement VoLTE. Since VoLTE is an all IP Network, the VPMN has no visibility of voice traffic originated via S8HR VoLTE roaming. While there are only an estimated 600 operators currently fully operational with VoLTE, it will take some years before there is a full transition from Circuit Switched (CS) to VoLTE.

Offering roaming partners some additional value now by reviewing their NRTRDE-OUT records is a sound strategic move to establish a trusted relationship which could then continue as the networks transition from CS to VoLTE and secure ongoing roaming revenues.