Partner: Product Development
Main responsibilities: For businesses such as manufacturers, consumer goods companies, software providers and others, product development is a key focal point of operations. If there’s no new product development, there’s likely no growth — and maybe even no business.
Departments that handle this function are typically responsible for all stages of the development lifecycle:
- product conception
- release into the marketplace
They cover the complete process of bringing a new product to life, whether it’s software, a home appliance, automobile, smartphone, sensor or anything else.
Who you should be working with: Risk managers might work with a variety of executives in this area, including, but not limited to, the chief product officer, chief design officer, vice president of product development, senior product manager and product manager.
How fraud can impact this function: The product development process is not immune to fraud. In fact, with so many companies relying on their own in-house-developed applications, and more and more products are designed for connectivity, increasing the likelihood of products being used to commit fraud.
The products themselves can become conduits to fraudulent activity if they’re not designed correctly. For instance, with the Internet of Things (IoT), can connect everything from smart meters to automobiles to factory equipment. With that connectivity comes the potential for hacking and fraudulent activity.
That’s why product development teams need to conduct preliminary research so they can identify potential vulnerabilities in new products, and can address these weaknesses early in the process. It’s important to balance the prevention of fraud with the demand for creating high-quality products that are both easy to use and innovative.
Fraud and fraud prevention tools can impact the product development function in other ways as well. Some of the key considerations:
- Direct financial impact — the potential to erode the bottom line because of losses due to fraud and increased cost of doing business due to higher costs by partners
- Loss of trust by customers due to fraud and risk issues
- Reputation and legal implications, such as exposure of data, breaches or incorrect data
- Impact on growth of business due to loss of orders and lost customers
Solutions to consider: Risk management executives can work with product development executives to help reduce or eliminate fraud and to minimize the impact on this function. Among the best practices:
- Consider fraud and risk factors during product concepting. For example, on a new financial service or any shared platform, think of user identity as the starting point of the product.
- Design customer experiences that can validate customers with zero or no friction. This enables a quality experience while ensuring the safe use of the service.
- Build the process to identify fraud risk, and integrate it with the fulfillment process. If goods are shipped to customers, for example, integrate fraud controls so that even analysis done after the order (but before the goods ship) can halt shipments.
- Have an integrated approach to managing customers, from identifying risk and moving on to product reviews to fulfilling orders and integrating with servicing channels. Unified experiences are critical, with risk and fraud controls baked in across the entire chain.
- Identify loopholes that can lead to fraud risk as early as possible in the product development process so they can be addressed in a way that helps create superlative customer experiences.