How Does Identity Verification Assist Corporate Risk Management?

Risk management must be an integral part of your business plan because it will help you successfully navigate obstacles so that your company can continue to grow. Risk management practices help you reduce costs, protect your business from fraud and remain in compliance with a number of different rules and regulations in your industry. Comprehensive identity verification tools help risk managers meet these regulations, such as CIP (Customer Identification Program) and Know Your Customer (KYC), as well as decrease costs and deter fraud.

Assist Corporate Risk ManagementAs technology continues to evolve and businesses expand, more and more transactions will be able to be made in a customer-not-present environment. For example, more high-risk and high-value transactions will be completed over the Internet or by utilizing a call center. Identity verification solutions make it easier for risk management teams to feel confident that customers are who they say they are and mitigate associated risk.

Identity Verification Uses for Risk Managers

Risk managers use identity verification techniques in numerous ways on a daily basis in order to protect their business assets. These include meeting CIP compliance, processing high-risk transactions, verifying account origination and facilitating ecommerce solutions. A recent survey conducted by IDology found that half of participants implement a form of automated identity verification for CIP compliance purposes. Twenty-six percent also use a system to help process high-risk transactions, which usually involve larger amounts of money or valuable items changing hands.

As a result, 60 percent of those companies that use identity verification for risk management experienced an increased ability to meet their compliance regulations and 44 percent experienced a decline in fraud losses. In addition to these benefits, companies also saw an increase in revenue, lower processing and business costs and high approval rates for new customers.

Why is Identity Verification Important for Mitigating Risk?

Now that you have a better sense of how companies use identity verification (IDV) for risk management, it is necessary to look at why it is important for a business. It is imperative for risk managers and business owners to mitigate risk from a holistic standpoint, ensuring that while taking steps to deter fraud, the organization also maintains or improves the customer experience and drives increased revenue. To achieve these goals, risk managers rely on real-time and on-demand IDV and fraud prevention solutions..

Dynamic Knowledge Based Authentication (KBA) is a simple way for businesses to confirm an identity through a non-intrusive approach in order to drive revenue by improving the rate of transaction approvals while also mitigating risk.. Customers appreciate that the company is taking steps to protect their account, which leads to lasting relationships with the business.

Without a strong IDV system in place, companies open themselves up to the risk of losing business and revenue to fraud. A person may pose as an existing customer, for example, and fraudulently authorize a fraudulent purchase. In the long run, it is the business’ responsibility to authenticate customers. Taking the few simple steps to implement an IDV system will help you safeguard your assets and protect your customers while your company continues to be successful moving forward.

Written by Britni Zandbergen, Senior Director of Marketing at Idology. Britni has years of experience in identity management as well as dynamic SaaS solutions.