Assessing Payments Risk is a Multiple Choice Challenge
This summer, I participated in a NACHA working group developing a new professional accreditation, the Accredited Payments Risk Professional (APRP). The credential will be awarded to payment professionals with relevant work experience who pass the APRP exam. The target exam candidate “is an individual who has demonstrated a comprehensive knowledge of risk management strategies, concepts, and mitigation techniques within the payments ecosystem.” The inaugural exam will take place in Q1 2018.
I had no idea how much fun it was going to be to write incorrect answers for multiple choice questions. (Fun fact: in the business of standardized test-writing, these are called “distractors”.) The incorrect answers need to be plausible, but not be “trick” answers. This is much more difficult than it seems. To create good distractors, you need to understand the big picture. And, for the candidate to be successful with the test, she/he has to know his/her stuff.
While putting myself in the candidate’s shoes, I got to thinking about how Bill.com manages risk in our part of the ecosystem: the B2B space. Bill.com moves $36B in payments volume per year and has two million businesses in our e-payments network. This breadth and depth give us unsurpassed knowledge of what “normal” looks like in a B2B payment.
As we think about payments risk management, our objective is not to eliminate exposure. Rather, we work to address incoming threats quickly, without refusing too many new client applications or declining good transactions. We are constantly adapting our anomaly detection rules and models as threats emerge, evolve, and fade.
Playing defense this well requires cross-functional collaboration between sales, operations, product management, and risk strategy. Here at Bill.com, threats can be (and are) identified by alert teammates across our entire organization, because everyone understands the risks we face. Employee education is a big focus for us. If you don’t know what to look for, you won’t find it.
Our secret sauce combines our own tools and intelligence with third-party anomaly detection providers. These external partners identify problems based on what other companies have seen. The results are powerful: we successfully separate the signal from the noise to manage risk behind the scenes, without getting in the way of our customers doing business.
Assessing B2B payments risk is a true multiple-choice challenge. In our experience, to build a world-class risk management program, you need to:
a. Keep employees educated about new threats and trends. To borrow from the New Yorkers, we tell our employees and partners, “If you see something, say something.”
b. Choose best-in-class tools. These providers can help bring the outside in, creating great synergies with your own data.
c. Stay focused on the customer experience. Don’t expect to get it right every time; keep iterating.
d. All of the above!
Don’t miss Colleen Lindow at AFP in San Diego, October 15-18th. She will be discussing payments on a global scale during the session, Cross-Border Digital Commerce: Positioning for Payments Success Globally, on Monday, October 16, starting at 4 PM.