Risk management: better together

LSEG Risk Intelligence’s inaugural Partners Summit heard from industry experts and those with first-hand experience about evolving financial crime risks. When it comes to finding solutions, one thing was clear: we’re stronger when we work together

“Better risk management may be the only truly necessary element of success.” So said former Federal Reserve chair Alan Greenspan. He’s certainly right. But while Greenspan was talking about banking 20 years ago, his words still ring true for any sector and for individuals, too.  

Effective risk management is about knowing who you’re dealing with – whether that’s your employees, partners, clients or even your friends. That’s getting harder all the time. As our world becomes increasingly digital, and as more introductions and services are provided online rather than face-to-face, it becomes easier for people and companies to obscure who they really are.

Regulations designed to protect corporates, governments and private individuals from bad actors are constantly evolving. Those that don’t comply – by accident or design – risk reputational and financial damage.

Effective risk management takes a village. That’s why collaborations and partnerships – be they with technology providers, data platforms, law enforcement, specialist organised crime fighters or other government bodies – are key to success.

In September we held our inaugural Partners Summit in London, where our speakers gave attendees a reminder of the kinds of risks we face and demonstrated the importance of working together to fight them

Cecilie Fjellhøy spoke about being scammed out of hundreds of thousands of pounds by a man she met online – widely known as the Tinder Swindler after the Netflix documentary about her story. The convicted conman, wanted for fraud in his home country of Israel, used fake identities and forged documents to manipulate several women into taking out loans and credit cards to fund his lifestyle. Fjellhøy hopes her story will convince those in a position of power to do more to protect fraud victims.

She acknowledges that a digital identity would be useful on dating platforms for reliable identity verification and also advocates including victims of scams when banks and regulators design new processes and draw up laws to protect the public.

This theme of having a credible and secure digital ID was core to the discussion between LSEG’s Ramesh Menon and Geraint Rogers of biometrics specialist DAON. With multiple legal definitions, and long lists of attributes that can make up a person or entity’s digital identity, it’s hard to draw up effective regulation and legislation – and it causes problems for those wanting to carry out ID verification. Of course, in the face of such complexity, it’s easier for criminals to find ways to steal or impersonate an identity.

Rogers sees a simpler future where the individual will be more in control of their data and how they share it, helping to secure their own identity. But he concedes that in the meantime we have to deal with the legacy of large digital footprints and multiple digital ID constructs. This demands robust verification and he believes friction – when there’s a time lag to identification – is necessary to protect genuine individuals and organisations. He also sees a decisive role for biometrics.

Mary Aiken, professor in cyberpsychology at the University of East London and an adviser to Europol’s European Cybercrime Centre, drew on her psychology training to explain how humans are actually pretty good at spotting when something is wrong – a phenomenon known as the “uncanny valley”. She thinks there’s lots about online behaviour that helps us identify danger. It might the clothes someone is wearing – not their usual style – or a strange tone of voice. An absence of something can also trigger unease – such as a blurred background in a deep-fake video.

She believes that understanding safe cyber behaviour goes hand-in-hand with cybersecurity and insists that organisations should design solutions with safety in mind. For example, by looking at how a hacker behaves, and playing to that; understanding that those likely to use ransomware are likely to have narcissistic traits – only a cruel person would hack a hospital and hold its systems to ransom. Knowing these things empowers us to spot and defend against them, and will help us work towards a more safe and secure cyberspace.

These sessions remind us that we need to remain alert to financial crime and continue to collaborate to find new ways to keep protect people and organisations. Here’s to another year of partnership and pooled resources and the world of opportunities that this will bring.

Watch the video series now: Insights from Risk Management Experts LSEG Risk Intelligence: Insights from Risk Management Experts