OPERATIONAL RISK MITIGATION FOR MICROFINANCE

Microfinance Risk Environment Microfinance institutions (MFI’s) have been subject to repeated operational risk losses and regulatory penalties resulting from fraud, internal policy breaches and compliance breaches over the past years. Many high profile cases have led to large scale financial and reputational losses, even business closure. These risk events are largely attributable to weak internal control environments that allow fraudsters to commit fraud without being detected. As IT systems continue grow, supporting channels, financial transactions, and IT layers, complexity also increases and creates more opportunities for fraud to take place. NetGuardians is a leading Swiss FinTech company recognized for its unique fraud and risk assurance solutions. NetGuardians combines the microfinance industry expertise with advanced analytics to offer you the most effective approach. With our risk mitigation solution, FraudGuardian, you will be able to safeguard your business and protect your customers.

The Most Complete Fraud Mitigation Platform FraudGuardian is backed by NG|Screener, an innovative enterprise software platform that operates across the entire banking system. Banks rely on a complex IT structure of hundreds of systems from the network to core banking applications. Most anti-fraud solutions focus on either financial transactions or IT activity. In fact, fraud activity is transversal across these systems. The NG|Screener enterprise software platform that supports FraudGuardian combines the data capture capability of a SIEM (security incidents and events management) system with a user behavior analytics approach related to financial transactions. It operates across all channels, IT layers and financial transactions, correlating data and analyzing user behavior against fraud patterns. FraudGuardian sends alerts to responsible investigators when there is a suspicious behavior.

What data is analyzed? All IT Layers: network, operating system, databases, applications, etc. All Banking Channels: front-office, back-office, e-banking, m-banking etc. All Financial transactions

Control Automation Predefined Intelligence Bundles for Microfinance FraudGuardian helps you meet your specific fraud challenges with pre-defined Intelligence Bundles containing sets of controls. These controls, called Smart Control Objectives, ensure continuous auditing of human behavior across channels, IT layers and financial transactions. Our library includes over hundreds of controls. The NetGuardians team of experts keeps track of changing fraud patterns so you stay up-to-date and continually guarded against fraud through our controls update service. The Smart Control Objectives that you select are plugged into NG|Screener, NetGuardians’ patent-pending software platform. Running like reliable Swiss clockwork, NG|Screener’s controls operate continuously without impacting the performance of your banking applications.

Made for Microfinance NetGuardians understands the fraud and risk challenges that MFI’s face on a daily basis. Our Risk Consultants develop Smart Control Objectives specific to microfinance business environment. Some common examples of fraud in Microfinance include:

Internal Fraud

External Fraud

Creation of fake customer accounts Fraudulent loan approvals / write-offs Pyramid loan schemes Using stolen credentials to make fraudulent funds transfers

Same collateral multiple times for different loans Identity theft Customer account takeover

NetGuardians library of controls will support you with the intelligence needed to detect these fraud cases and many more. We maintain our leading edge by updating our controls on a continuous basis to combat emerging patterns of fraud. Controls examples

St

Pf

It

At

Co

Suspicious transaction

Payments fraud

Identity theft

Account takeover

Collusion

Strong partnerships to deliver the best in microfinance NetGuardians has strong network of partnerships. One of our alliance partners for microfinance fraud is Fraud Doctor LLC. NetGuardians partners with Fraud Doctor LLC as their company has recently developed a Taxonomy of Fraud in microfinance. Their work is based upon the ground breaking leading research by Stanford Centre of Longevity who for the first time in the field of microfinance fraud, has developed a framework for a Taxonomy of Fraud. Fraud Doctor has made it possible to have baseline definitions, structure and congruence for Fraud such that specific operation risk category can be consistently measured in determination of risk appetite, tolerance levels, ORIs/KRIs, identification of anomalies and therefore develop a predefined management action to protect our customers and their businesses.

NetGuardians approach to reducing risk A professional and qualified risk consultant will work with you to determine the operational risks to which your business is exposed across all the 3 lines of defence. This involves a review of your internal policies, system architectures, emerging risks, regulatory requirements, fraud risks etc. NetGuardians library of pre-defined controls cover a wide range of use cases that will mitigate the risks identified. Our Risk Consultant will provide you with guidance on which of these controls are needed in your environment. Additional and customized controls are provided to answer specific risks that may not be covered in our library. Following your approval, a NetGuardians technician will implement the FraudGuardian risk mitigation platform in a matter of days. Your selected controls will run in real-time to provide ongoing and continuous protection to your business. When new controls are needed, your business can also quickly and easily implement these using the NetGuardians Controls Wizard. Through regular business reviews with your NetGuardians consultant, you will receive continued guidance and support to ensure your business continues to effectively mitigate its risks.

Benefits MUST-HAVE TECHNOLOGY WITH HIGH RETURN IN INVESTMENT

CONTINUOUS CONTROL & AUTOMATED COMPLIANCE

Independent assessment by Gartner determines that this technology offers ROI in under 1 year

Move from audit sampling to continuous control and save 60 % of your time.

FOSTER COMPLIANCE CULTURE

REDUCE RISK & PREVENT FRAUD LOSS

Detect breaches in real-time and identify risk issues that require attention. Track cases through NG|Case Manager and investigate with NG|Forensic.

Detect fraud before it happens, safeguard your profit, business, and your reputation.

They trust NetGuardians

About NetGuardians NetGuardians is a leading FinTech company recognized for its unique approach to fraud and risk assurance solutions. Their software leverages Big Data to correlate and analyze behaviors across the entire bank system – not just at the transaction level. With pre-defined controls, NetGuardians enables banks to address specific anti-fraud or regulatory requirements. A controls update service ensures financial institutions benefit from ongoing protection in the face of the continually evolving risk challenges of a border-free world. Founded in 2007, NetGuardians was the first company to emerge from the innovation incubator Y-Parc, in Yverdon-les-Bains, Switzerland. Since then, they have seen a steadily growing client base in Europe, the Middle East and Africa. In 2015, the company was named a Gartner “Cool Vendor” in the “Cool Vendors in Audit and Compliance Innovate Controls Validation Techniques” category.

www.netguardians.ch [email protected]

NetGuardians Headquarters Y-Parc Rue Galilée 6 1400 Yverdon-les-Bains Switzerland T +41 24 425 97 60 F +41 24 425 97 65

NetGuardians Africa KMA Centre,7th floor Mara Road Upper Hill Nairobi Kenya T +254 204 93 11 96

NetGuardians Asia 50 Raffles Place, #26-06 Singapore Land Tower 048 623 Singapore

NetGuardians Eastern Europe NIMBUS Office Aleje Jerozolimskie 98 00-807 Warsaw Poland