Risk Based Approach to RA
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Risk Based Approach to RA

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Understanding revenue risk is central to implementing effective RA controls, and to establishing a company-wide revenue and cost risk management framework. ...

Understanding revenue risk is central to implementing effective RA controls, and to establishing a company-wide revenue and cost risk management framework.

Identifying and closing control gaps should be the highest priority for revenue assurance managers today.

This webinar with Geoff Ibbett, independent consultant and TM Forum Trainer, discussed an approach to risk mitigation that will allow managers to optimise costs at the same time.

Covered in the webinar:

- An introduction to RA maturity
- Basic risk management concepts
- Preventative vs. corrective techniques
- The importance of primary and secondary controls
- Dynamic risk management

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Risk Based Approach to RA Presentation Transcript

  • 1. Revenue Risk Management The Future of Revenue Assurance Exploiting risk management techniques to accelerate Revenue Assurance maturity January 2014 Copyright © 2008-2014 Revenue Risk Management Solutions Limited 1
  • 2. Introduction • How can we improve RA maturity? • How much of my revenue is at risk? • How can we improve the effectiveness of RA operations? • How can we maximise the return on RA invesment? Copyright © 2008-2014 Revenue Risk Management Solutions Limited 2 Geoff Ibbett Senior Consultant rrmSolutions RA Maturity Revenue Gradient Revenue & Cost Risk Modeling Primary & Secondary Controls Expected vs Actual Risk Reduction Control Effectiveness Dynamic Risk Management
  • 3. Revenue assurance maturity Copyright © 2008-2014 Revenue Risk Management Solutions Limited 3 Source: TM Forum, TR131 Recovery Avoidance and correction Prevention
  • 4. TM Forum Maturity Levels Copyright © 2008-2014 Revenue Risk Management Solutions Limited 4 Level 5: OPTIMISING Integrated revenue risk management programme, complete revenue & cost risk framework RA objectives directly linked to the goals of the business Level 4: MANAGED Full coverage, primary and secondary controls, approach based on risk mitigation RA is a shared responsibility throughout the whole organisation Level: 3 DEFINED Independent RA team, automated RA system, limited coverage Control operation is centred on the RA team Level 2: REPEATABLE RA team, part of another dept, limited resources, no dedicated tooling Issues likely to recur, limited access to information, data prep dominates activities Level 1: INITIAL No dedicated RA team, set of independent initiatives Ad hoc reaction to circumstances, inconsistent approach 2013 1998
  • 5. The revenue gradient Copyright © 2008-2014 Revenue Risk Management Solutions Limited 5 Order management Network Pricing Charging Payment/ Settlement Reporting $ Value of services ordered Value of services supplied Value of rated services Value of charged services Value of services paid for Reported value of services Fines COA mapping errors Error/suspense External fraud Bad debt Margin errors Over payments Rebates Penalty payments Internal fraud Charging errors Invoicing errors Internal fraud Metering errors Usage mgmt errors Tariff mgmt errors Rating errors Subscriber mgmt errors Subscription errors Stranded assets Inflated costs Logistics errors Quality of service issues
  • 6. Risk management concepts Copyright © 2008-2014 Revenue Risk Management Solutions Limited 6 • Vulnerability • Threats • Risks • Consequences • Inherent risk • Controls • Measures • Risk reduction • Residual risk • Performance indicator
  • 7. Consequences of RA issues Copyright © 2008-2014 Revenue Risk Management Solutions Limited 7 Under billing Over billing Rebates Penalties Contractual liabilities Fines Inflated costs Impaired cash flow Opportunity loss Elevated fraud risk Customer satisfaction Customer churn Staff churn Qualified audits Reporting inaccuracy Reputational damage
  • 8. Inherent vulnerabilities Copyright © 2008-2014 Revenue Risk Management Solutions Limited 8 Systems integration Processes & procedures Degree of manual processes OSS/BSS systems Product management Business rules Change management Testing strategy Reference data management Configuration management Logistics Quality of service Customer service Controls Knowledge of end-to-end bus. processes Corporate maturity
  • 9. Key risk areas Copyright © 2008-2014 Revenue Risk Management Solutions Limited 9 Source: TM Forum, GB941 1. Product and offer management 2. Order management and provisioning 3. Network and usage management 4. Rating and billing 5. Receivables management 6. Finance and accounting 7. Customer management 8. Partner management
  • 10. Example of control and its measures Copyright © 2008-2014 Revenue Risk Management Solutions Limited 10 Element Description Vulnerability Poor systems integration Threat Data loss Control Ensure completeness of data transfers Measures File count Block count Record count File sequence gap check Block sequence gap check Record sequence gap check Inter CDR end-time gap check
  • 11. RA risk assessment Copyright © 2008-2014 Revenue Risk Management Solutions Limited 11
  • 12. Risk levels Copyright © 2008-2014 Revenue Risk Management Solutions Limited 12 Time Level of Risk Inherent risk Target risk Residual risk Expected risk reductionTarget risk reduction Risk assessment New threat Change in risk appetite
  • 13. Control effectiveness Scope FrequencyCorrectness Accuracy Copyright © 2008-2014 Revenue Risk Management Solutions Limited 13 The coverage provided by the control How often the control is operationalFitness for purpose Quality of its implementation
  • 14. Risk levels Copyright © 2008-2014 Revenue Risk Management Solutions Limited 14 Time Level of Risk Inherent risk Expected risk Actual risk Expected risk reduction Actual risk reduction Risk assessment New threat Target risk Change in risk appetite Target risk reduction Residual risk
  • 15. Systems & processes Primary (in-line) Controls Secondary (RA) Controls Primary vs secondary controls Copyright © 2008-2012 Revenue Risk Management Solutions 15 $ Threat Threat Threat Threat
  • 16. Primary vs secondary controls Copyright © 2008-2014 Revenue Risk Management Solutions Limited 16 Order management Network Pricing Charging Payment/ Settlement Reporting Primary (in-line) controls Secondary (RA) controls Revenue Assurance • Primary controls should be designed to protect against revenue risk on a continuous basis • Primary controls should be operated by the responsible department • Secondary controls should be used to test the effectiveness of primary controls • Secondary controls should be performed by the revenue assurance team
  • 17. Dynamic risk management Copyright © 2008-2014 Revenue Risk Management Solutions Limited 17 Risk Assessment Control Measure Risk Reduction Residual Risk Monitor Measures Risk Events Re-evaluate Risk Threat Inherent Risk Primary Controls Expected risk Actual risk Dynamic Risk Management RA Systems Operational Systems Primary Controls Secondary Controls
  • 18. Business benefits Copyright © 2008-2014 Revenue Risk Management Solutions Limited 18 Improved understanding of risk profile Identify preventative actions Baseline for cost/benefit analysis Prioritise control deployment • Monitor control operation • Actual vs expected residual risk • Verify accuracy of risk assessments • Help to eliminate assumptions • Prevent recurrence • Anticipate future risks • Establish cost of controls • Eliminate over-protection • Based on risk mitigation • Target controls more effectively
  • 19. Summary Copyright © 2008-2014 Revenue Risk Management Solutions Limited 19 The rate of improvement in RA maturity is slowing • In many cases it has reached a ceiling • In some it has stagnated A fundamental change of approach is required • A shift to preventative rather than corrective actions • Change from bottom-up, reactive activities to top-down, risk based initiatives • Separation of primary and secondary controls is essential • Revenue & cost risk must be a shared responsibility throughout an organisation • Target RA budgets to where they are needed Extract more value from our investment in RA tooling • Improved automation of routine tasks • Notification when something needs to be investigated • We need to work smarter not harder
  • 20. Questions and answers Copyright © 2008-2014 Revenue Risk Management Solutions Limited 20 Geoff Ibbett Senior Consultant rrmSolutions RA Maturity Revenue Gradient Revenue & Cost Risk Modeling Primary & Secondary Controls Expected vs Actual Risk Reduction Control Effectiveness Dynamic Risk Management A risk-based approach to Revenue Assurance