Increased global volatility, particularly due to the COVID-19 pandemic and the shift to eCommerce, has heightened risks for retail organisations, especially concerning supply chains and existing retail models.
At Ryft, risk is defined as an organisation's capacity to handle adverse events such as privacy loss, data breaches, compromised data security, increased fraud, scams, and IT infrastructure hacking.
While financial technology (FinTech) innovation offers significant benefits, it also introduces new risks. For eCommerce platforms, mitigating these risks often involves partnering with a fully compliant Payment-as-a-Service platform like Ryft, which handles the complexities of regulatory compliance.
While Ryft manages the regulatory compliance and security of its own payment infrastructure, this does not remove the need for eCommerce platforms to manage fraud risk arising from their own operations.
Risk management is the essential process of identifying, assessing, and controlling threats to an organisation's capital and earnings, irrespective of its size or industry. In FinTech, this specifically means identifying, assessing, and mitigating threats to an organisation's own platform and operations.
Ryft manages this for its own systems; each third party integrating with Ryft is responsible for identifying, assessing, and mitigating threats to its own business.
Governments and federal organisations are continuously implementing regulations to protect customer data from security breaches and hacks.
Organisations must determine their risk threshold, categorised into three types:
- Risk Appetite: The maximum level of risk an eCommerce platform is willing to accept to achieve strategic objectives. Once this is reached, risk reduction measures are necessary.
- Risk Tolerance: The acceptable amount of volatility or deviation from the risk appetite, indicating when an organisation might start becoming risk-averse.
- Risk Aversion: The point at which a platform is no longer prepared to take risks.
These thresholds are set by each business individually and are not determined or assumed by Ryft on a merchant's behalf.
Risk management isn't about eliminating all risks but about identifying which risks are worth taking to achieve organisational goals and which can be transferred.
Ryft manages risk relating to its own payment processing platform, ensuring its service remains compliant and secure. This does not offload a merchant's responsibility for its own fraud prevention or risk management - that responsibility sits with the merchant at all times, regardless of the payment platform used.
Ultimately, effective risk management should be viewed as a strategic enabler rather than merely a cost of doing business.