There's a revolution going on in the payment technology space right now, and on-premise old generation solutions are rapidly being replaced with software as a service solution. However, it's vitally important for businesses to embrace payment security innovations at the same time and at the same pace.
When the business is looking to embrace operative risk management as a whole, payment security is perhaps one of the most critical things to address.
The separation of duties concept prohibits the assignment of responsibility to one person for the acquisition of assets, their custody, and the related record keeping. For example, one person can place an order to buy an asset, but a different person must record the transaction in the accounting records. By separating duties, it is easier to prevent fraud, since at least two people must work together to do so - which is far less likely than if one person is responsible for all aspects of accounting transaction.
Well-managed audit trails are key indicators of good internal business controls and form the basis of objectivity. Audit trails have long been done on paper or electronically. Step by step digitalization of old generation computer systems has moved to auditors and organizations preferring electronic logs and trail systems. The electronic logs automate and make the documented history of a transaction more accurate, accessible and usable. Successful audit trails demand a simple process with a commitment by upper management and affected departments.
Companies that operate in a multi-currency environment may be exposed to big translation and transaction risks due to the fluctuation of currency exchange rates. Good governance requires controlling that risk, but often reporting the transaction risk centrally gets cumbersome. Consequently, foreign currency hedging may be handled locally by individuals who may make weakly informed decisions, resulting in even bigger exposures in the worst case.
Detecting and preventing fraudulent activities is more important than ever as fraud attempts have seen a drastic increase in recent years. Significant amounts are lost each year due to financial fraud and hence organizations are starting to implement operative risk management processes to prevent fraud. Real-time fraud detection is an upcoming and important factor and fraud detection systems and artificial intelligence can be used to prevent financial crimes.