Business risk consultancy Riskskill (www.riskskill.com) has highlighted what it sees as the main areas of business risk in 2014. Advances in mobile and payment technology predominate globally, along with a retrenchment of government strategy in the UK. Their research suggests that key areas of risk growth in 2014 include:

1. Fraud Risks
In 2014 fraud risks are likely to be the major contender for exposing many businesses to significant risk as the closure of the government’s National Fraud Authority (NFA) could, some feel, be seen by fraudsters as a huge victory for the bad guys. The NFA was set up to consolidate and focus upon the handling and approach of combatting fraud and also to direct the strategic elements of the attack on the fraudster. The NFA objectives were previously diluted from eight to three, with the more 'strategic issues' removed. Now its remaining operational functions have been atomized into several government silos.

On the commercial side, payment markets will continue to evolve very quickly this year. New payment systems and software solutions are appearing daily. Many of these do not put in place effective authentication, security, standards or best practice systems. Often, this is because these have yet to be created in a market that is changing so rapidly. New mobile payment and wallet solutions are being developed with the backing of ‘big’ funding and strong marketing campaigns. Only a few of these will win through though. Many will fail, either commercially or because of serious 'fraud attacks' that exploit the lack of authentication.

2. Identity Validation / Authentication
Who am I dealing with? This will become an increasingly important ‘risk related’ question in 2014 for businesses and consumers alike and it is very much linked into the whole 'mobile' market evolution. Anti Money Laundering legislation, whether it is in the UK or across the EU, requires that one properly identifies who we are doing business with, know what our customers do, regularly check, watch and look for unusual transactions that might be illegal, and report anything suspect.

There are though several weaknesses in this area. For example, some small operators of 'new' payment solutions think that they are excluded from these requirements. There are also some insurance company policy sellers, who are playing catch up and often who do not check identities.  Then there is the public who are increasingly becoming payment providers as they buy and sell more on-line. Whereas one used to know who one was dealing with for financial transactions (as it used to be only one’s banks, card companies and utilities that one dealt with) it can now potentially be almost anyone, anywhere in the world.

As a consequence, identity, identity validation and data certainty will all move up the risk hierarchy and as a result so will the level of importance placed on these areas by businesses in 2014. These risks will be amplified greatly or those organisations that do not understand the issues or address them properly.

3. Big-Data Losses
With such problems increasingly arising where our personal data is held and managed by more and more people, often across the web, a new generation of customers are very open about their data and therein are disclosing everything about their finances. They are very keen to become users of the new mobile breed of financial products, which will increasingly present greater opportunities for identity theft and data compromises. With numerous high profile data breaches losing millions of customer data records including payment details in 2013, one can see that more of these types of losses will be incurred over the coming year. Thankfully, the PCI DSS initiatives have helped to protect payments but there are too many people now handling our data. Some observers feel that there is not a comprehensive and pervasive enough solution to protect us. H M Government should be setting the strategy here, but do they have right ‘body’ with the appropriate level of oversight to understand the threat now that the NFA has been disbanded?

4. Protection For Multiple Channels
The proliferation of new wallets, payment instruments, mobile devices, payment applications and  standards being developed means that for businesses to keep up, they need to evolve new protections, controls, and security that are consistent across multiple channels simultaneously – what one might call ‘unified protection’. As ever, the security and controls side of things will often lag behind; so businesses must ensure that these developments are carried out fully and that they are free from short-cuts as these will lead to problems later.

One of the major areas of attack expected is a fresh onslaught of new viruses. With such new threats as Cryptolocker, and other such plagues landing on business of all sizes, there is a risk that this kind of attack could reach epidemic levels in 2014. Even the smallest firms must ensure that they update virus and anti-malware software regularly, maintain strong back-up regimes and avoid clicking on any suspicious links. If these dangers move closer to mobile payments, it could threaten the momentum of the mobile sector evolution especially where authentication is often far less effective than it could or should be.

5. Silo Mentality Causing Corporate Ineffectiveness in Combatting Risk
Borne out of the desire to conduct business correctly, increasingly complicated silo structures have grown up in the corporate world, with many differing and sometimes potentially conflicting interests. Often large businesses in particular, introduce several highly ineffective theoretical layers of risk management protection that often keep the business too busy and too slow to do the real work required to tackle the challenges that organisations face.

Instead, businesses should be fighting hard to define clear risk management direction, together with business goals that incorporate risk thinking and risk/loss targets. Collaboration is the key here. It facilitates speed of decision-making, clear and assertive action-taking and an understanding of the business drivers. It also enables the ability to act, invest and change the business as required which are key to controlling risks.

Says Bill Trueman CEO of Riskskill’s parent company UKFraud, “The whole area of risk management is an on-going challenge to maintain and manage controls and processes in business. Losses tend only to be managed in a panic when they happen, but are generally predictable and avoidable. Equally, management should be able to move and act quickly and effectively to change the business and to react to attacks. Problems generally occur because the controls, measurements, or IT security technologies have lapsed over time. With the exception of fraud losses, things do not take us by surprise. Even with fraud, most of the losses are completely preventable and something that can be planned for.

“In 2014 it is going to become easier for things to  go wrong. As we enter the year with FTSE / S&P highs and increasing employment rates, the evident green shoots of recovery will see system controls and financial prudence starting to relax. This will encourage both internal and external attacks on a business and upon individuals alike.  Greedy crooks, will take these more relaxed opportunities and exploit them fully. The opening of new product and sales channels such as mobile payment will inevitably mean that there will be gaps and new risks that are opened up. The risk management challenges in addressing these will probably predominate in 2014.”