This year the Eurofinance conference in Copenhagen had “Resilient treasury” as its theme. It really hit the point of the discussions and talks I took part of. Cyber security and fraud management, issues that demand resilience, were recurring topics among the exhibition stands as well as the seminars. No wonder – this is, or should at least be, on top of all treasurers agenda right now.
I would say that treasury among Nordic corporates are not yet attentive enough in these matters. Their processes need to evolve, and this demands persistence and engagement. I think that treasury is the function that has best competence and networks to secure payments and minimise risks. That is one duty of the resilient treasury to engage in.
Treasury is today a supporting business function. This is important to underline and to bear in mind when discussing resilience connected to treasury. It is important that treasurers do not find the accelerating development of IT-systems, artificial intelligent and machine learning to be just a nuisance and a headache. We must evolve in our IT competence and understanding of how new digital systems affect our business.
IT security matters and it is crucial that we don’t just pass these issues on to the IT function. Treasury must and should be involved in and an integrated part of the organisations’ cyber security and fraud management. This is the only way to be resilient and bring relevance to the management.
KYC is so much more
When discussing fraud and security it is inevitable to mention KYC processes. This is often seen as a mere administration burden from the banks, I know. And from the banks’ perspective, pure formalities to protect you – that’s what it is. But think about it. From a corporate perspective this is so much more. First of all, you should include your suppliers in your KYC-processes. KYC becomes KYS as well. Question yourself: How do we want to address our customers and suppliers from a risk perspective?
To be able to answer the question you must step back and reflect on the term risk. What is it? The core of corporate risks is to not have complete control of the customers’ and suppliers’ businesses. Simply put, to not Know Your Customer.
Do you know where your money ends up?
Almost all businesses connect suppliers and customers in a complicated network. Companies you acquire or partner with — assess the cybersecurity risk you inherit from them. You want your customers to use your products and services in a safe and ethical way and to protect your organisation’s reputation. You want your suppliers to comply with legislation and have a positive impact on the local community. Not the other way around. Negative publicity is an obvious risk for all businesses.
When it comes to financial risks, how do you secure that your money is not being paid to unauthorised organisations, imposters or even international black listed actors? Here the connection between treasury management systems and KYC-processes as well as cyber security becomes obvious.
Digitalisation takes cyber security to a new level
Our partner Bellin has developed a system that automatically screens all supplier payments. Is it evaluated and approved it is marked green. If not it gets a yellow mark. And if it is on the systems black list it will be red and the system alarms.
This is a new and higher level of security that should be implemented in every fraud management routines and systems. It also connects with your KYC-processes. And then it becomes clear: KYC is not just an administrative burden. It is business support at its most critical point. This is why treasury must take the lead and not just pass these processes over to the IT and controlling functions.
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Lars Beckman is CEO at CORE Process. Lars has extensive experience in start-up fintech businesses, international internal corporate banks and business development, as well as being a project/customer manager and running large projects. Lars also has deep experience of investment and risk committee work.