Open Password – Friday, August 27, 2021
#966
Afghanistan – Journalist Center Germany – DPV – bdfj – Shams Ul-Haq – Taliban – Islamic State – Journalists – Christian Laufkötter – Afghan Journalists Safety Committee – PATON – Patent Strategies – Patent Management – Cyber Security Report – Deloitte – Allensbach Institute for Demoscopy – Digital Opinion Formation – Data Fraud – Malware – Fake News – Social Media – Democracy in Danger – State/Business Cooperation – Managers – Corporate Reputation – Filter Bubbles – Shitstorm – Members of Parliament – Cyber Resilience – Key Technologies – Digital Sovereignty – Centralization – Home Office – Corona – Collaboration Tools – Video Conferencing Tools – BIIA – Credit Information – Post Pandemic World – Economic Recovery – Knowing Your Customer – Digitalization – Cyberattacks – Fraud – Data Breaches – Money Laundering – Regulatory Developments – Information Asymmetry – Alternative Data – Transactional Data – Financial Crisis – 2nd Payments Services Directive – Self-reporting – Open Banking – Open Data – Rent Recognition Challenge – E-Commerce Platforms – Alibaba – Artificial Intelligence – Machine Learning – EU General Data Protection Regulation – Unintended Consequences – Refinitiv – COVID-19 – Supply Chain Due Diligence – Phil Cotter – Due Diligence Checks – Risk Management – Disrupted Supply Chains – Risk Exposure – KYC – Remote Working Culture – Cybercrime
Afghanistan: Journalist Center Germany asks for support
II.
PATON: Development of successful patent strategies and efficient patent management
III.
Cyber Security Report 2021: Threat situation at a high level – digital opinion formation in danger
Cover story
Credit Information in a Post Pandemic Digital World – By Neil Munroe
Refinitiv Survey reveals true impact of COVID-19 on supply chain due diligence
Afghanistan
Journalist Center Germany
asks for support
(Journalists’ Center) The situation in Afghanistan is rapidly deteriorating. Editor and terrorism expert Shams Ul-Haq traveled to Kabul for DPV and bdfj to report on the lightning-fast overthrow of the government and its consequences. “In addition to the Taliban, IS is also very active in Kabul. There are concrete indications that IS is planning attacks on the city and the airport,” he reports. The situation is very confusing because IS is also fighting against the Taliban. The working conditions for journalists on site are dangerous: “I was prevented from working while filming by Taliban fighters with Kalashnikovs, despite having permission. The Taliban often do not understand what is allowed and what is not. This can be very dangerous for us journalists.” Western journalists could only work with strong security personnel, if at all.
The Journalism Center Germany calls on the German government to help journalists in Afghanistan. Freedom of the press according to Western understanding will not be possible in the country in the foreseeable future. “But those people who have tried to establish this freedom of the press in recent years should not suffer from this,” says Christian Laufkötter, press spokesman for the two professional associations DPV and bdfj.
For the majority of local journalists in Afghanistan and their families, it is currently a matter of sheer survival. In recent days, the Taliban have already murdered family members of journalists who were able to flee abroad. In order to help the local people, the Journalist Center Germany is calling for donations to the partner organization Afghan Journalists Safety Committee (AJSC). Information can be found at https://www.mediasupport.org/donate/?mc_cid=4e0580f7bf&mc_eid=abeb24093d .
The Journalism Center Germany is supported by two professional associations. The DPV German Press Association – Association for Journalists, founded in 1989, with around 7,500 members is the tariff-free umbrella organization for full-time journalists. The bdfj Federal Association of Specialist Journalists was founded in 2007 and is the largest advocacy group exclusively for second-career journalists in Germany.
PATON
Development of successful patent strategies
and efficient patent management
Ladies and Gentlemen
We look forward to seeing you from the 7th to the 9th. September 2021 to be able to invite you to an interesting seminar block in Ilmenau.
The day seminars are intended to help you develop successful patent strategies and install efficient patent management. The market and competitor analysis seminar teaches skills for obtaining a wide range of information that will support you in making decisions about the direction of patent strategies.
From October we will start the winter semester with a new program, with alternating online and face-to-face seminars. Seminars in the winter semester 2021/2022: https://ladon.patent-inf.tu-ilmenau.de/de/menu-ws-2022
PATON Academy (“Lifelong Learning”)
Cyber Security Report 2021:
Elite Panel
Threat situation at a high level:
Digital opinion formation in danger
Decision-makers see data fraud on the Internet as the greatest cyber threat to
the population, closely followed by malware and fake news.
- Social media influences the formation of political opinions: More than half of the MPs surveyed see risks rather than opportunities for democracy.
- Lack of exchange between the state and business: Almost 80 percent of those surveyed complain about the lack of targeted cooperation.
(Deloitte) Increased frequency, large-scale, precise: Cyber attacks now have the potential not only to cause enormous economic damage, but also to provoke political tensions. Given the increasing number and complexity of cyber attacks, the threat situation continues to worsen. In this explosive environment, politics and business highly assess the dangers surrounding cyber risks. This is shown by the results of the current cyber security report, for which Deloitte and the Allensbach Institute for Demoscopy surveyed more than 400 executives from companies and over 100 members of the state parliaments, the Bundestag and the European Parliament about the status of cyber security in Germany.
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Concern about manipulation of public opinion: danger level in the 2021 election year at a record high
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Decision-makers see data fraud on the Internet as the greatest cyber risk for the population: 77 percent rate this as a major cyber risk, a new high. Computer viruses and malware follow on the threat list at 76 percent, although those surveyed assess the threat differently: 79 percent of business representatives see a major risk here, while the figure for political decision-makers is 65 percent.
In the 2021 election year, the risk of digital election manipulation is also increasing: accelerated by the corona pandemic, the election campaign is partially shifting online. There is correspondingly great concern about the manipulation of public opinion through fake news. 75 percent of decision-makers see major risks here.
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Fake news, shitstorms and filter bubbles: Dangers for democracy and corporate reputation
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There is still a positive attitude towards social media. Most managers from medium-sized and large companies (58 percent) and the majority of MPs surveyed (60 percent) see this as opportunities rather than risks for companies or politicians.
At the same time, critical attitudes towards the increasing influence of social media on the formation of political opinions are growing. For 55 percent of MPs, the risks to democracy on social media outweigh the risks (2019: 50 percent). 86 percent of MPs rate filter bubbles as a very big or major threat to democracy.
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Known risks – still insufficient reactions on the part of the company
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15 percent of business leaders report that their companies have already fallen victim to a shitstorm. Large companies with 1,000 or more employees are affected more than average: 22 percent have had at least one such incident in the past. Nevertheless, only 55 percent of all companies surveyed systematically follow what is reported about them in the relevant media. This is less common among companies that see social media as more of a risk than an opportunity (40 percent).
Compared to companies, MPs are affected by shitstorms much more often. Almost every second MP (49 percent) has already been exposed to a shitstorm at least once. 68 percent of MPs keep up to date with what is being said about their party on social media.
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Cyber resilience requires technological independence.
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The promotion of key technologies helps to strengthen the competitiveness of the German economy on the international stage. The closer the digital networking, the more urgent the question of Germany’s digital sovereignty becomes. The topic concerns both the economy and politics. The vast majority of respondents believe that for cyber security in Germany it is necessary that important key technologies for digitalization and networking are produced by German or European companies. This is intended to ensure greater independence in the area of key technologies. This was stated by 82 percent of business leaders and 93 percent of MPs – an increase of eleven percentage points among business leaders and four percentage points among MPs compared to 2019.
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Cooperation between politics and business is inadequate – exchange is essential for effective protection
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There is still a lot of catching up to do in terms of cooperation between government agencies and business. Almost 80 percent of MPs and business representatives are of the opinion that the exchange is not sufficient.
The economy sees its needs as insufficiently taken into account by politicians in the area of cyber security: a good two thirds of those surveyed (68 percent) say this. A large proportion of MPs (58 percent) also feel that they are only less well informed or not well informed at all about the needs of the economy. The MPs surveyed received information on cyber security issues from their own environment. They therefore rely in particular on information from authorities, the Bundestag’s research service or the parliamentary groups.
Almost three quarters of business leaders (71 percent) call for greater centralization of government agencies when it comes to cyber security. Large companies in particular with 1,000 or more employees consider a central contact point to be important or very important. The opinion of the MPs surveyed is different: 48 percent are of the opinion that responsibilities are well divided between the federal and state levels, and a further 12 percent even advocate a more federal organization in this area.
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Danger source of home office – gateway for cyber attacks.
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Last but not least, it is due to the Corona pandemic that the importance of cyber security has become increasingly in the public eye. The spread of home office work and strong networking increase the attack surface for cyber criminals. With the high number of IT systems in the home office, their connection to each other and to the company network, as well as the increased use of collaboration tools, the need for effective protection is also growing. 34 percent of the business leaders surveyed said that cyber security had become more important in their company as a result of the Corona crisis. 82 percent of business representatives and 52 percent of MPs report that special IT security measures have been taken when working from home. This includes, for example, conducting training courses, installing special security software or blocking certain applications for employees.
Overall, the risk posed by employees working from home is considered to be rather low. 71 percent of business executives and 84 percent of MPs consider the risks to be less serious or see no additional risk. At the same time, 34 percent of business leaders and 22 percent of MPs have doubts about their employees’ risk awareness.
When it comes to video conferencing tools, 67 percent of business leaders and 59 percent of MPs rate the risk as less or not at all great. However, 56 percent of MPs and 48 percent of business executives have reservations about video conferencing tools from the USA with regard to data protection and data security.
BIIA’s August Contribution (2)
Credit Information in
a Post Pandemic Digital World
By Neil Munroe*
Neil Munroe
(BIIA) As we look to eventually exit the pandemic, there is no doubt that the focus will turn to how to stimulate economic recovery. Key to achieving this will be the ability for individuals and businesses to gain access to credit and key to making credit available will be having the best possible understanding of an individuals and a business’s ability to pay back any borrowings.
As we come out of the pandemic ‘knowing your customer’ is going to be more crucial than it’s ever been. When I use the term ‘know your customer’ I am not just referring to compliance with KYC regulations but to the whole customer lifecycle from acquisition, risk assessment, account management and collections.
All of these points of contact with customers are changing as the relationships more and more online. As we have all experienced this shift to a digital world has been accelerated by the pandemic. There is no doubt that the move to digital services can provide significant benefits to many. But as we have also seen it can increase the risks of financial crime, including cyberattacks, fraud, data breaches and money laundering. In such a world having access to relevant comprehensive information on a timely basis is going to be even more crucial.
So, what changes (if any) are we likely to see in the credit information space as a result of the push to restart economies and the ever-quickening move to a digital dialogue with customers? Many is the answer with a number already taking place. Changes in the ‘data landscape’ and in the use of technology I believe are two of the major ones. I also believe that you will see a significant shift in the service offerings of the credit information providers to support the growth in digital services and help limit the risks I mentioned above. Alongside all of this will be the challenge of regulatory developments that will come about as governments look to support individuals and businesses rights.
There is no doubt that the pandemic has increased the degree of information asymmetry between lenders and borrowers. While some businesses may appear solvent due to government support (eg, subsidized loans, repayment holidays), their condition may weaken when this support expires. Credit providers are likely to see a deterioration in traditional credit history of businesses. The same can be said of individuals as measures put in place for them also expire.
It is likely that if credit providers are relying on traditional credit information, they will start to see a growing number of individuals and businesses who will fail to meet their lending criteria. There is no doubt that despite having had issues during the pandemic some of these individuals and businesses will have managed to recover and will be a good risk going forward. So how are credit providers going to identify these? One way will be through ‘alternative data’.
Around the world, alternative data can take many different forms; from non-financial data such as utility data (gas, electricity, telco), to transaction data such as current account information or online e-commerce transaction information to data from social media platforms. In the case of non-financial data credit providers are able to gain a better understanding of how an individual or business is able to meet their commitments. With transactional data credit providers are also able to better understand cash flow and income. By accessing these ‘alternative data’ sources, credit providers are able to fill ‘the gap’ in their knowledge of a customers’ finances.
Prior to the pandemic the credit information industry had already identified that there was a gap in the information they could supply to provide a 360-degree view of a customer that credit providers need to make effective lending decisions and ensure such things as affordability requirement were met . While credit information providers have always been able to provide a view of outgoings, providing information on income has been more of a challenge.
The evolution of ‘open banking’ and ‘open data’ post the financial crisis of 2008 driven by the desire for governments for individuals and businesses to ‘own’ their data has provided the credit information industry the opportunity to fill the ‘gap’. The introduction of the 2nd Payments Services Directive (PSD2) in Europe has further supported this move.
Using open banking and open data channels driven by an individual’s consent has enabled credit information providers to enhance the level of both alternative and additional data they can provide. These channels provide credit information providers with real time access to new sources of data via APIs alongside the traditional monthly updates from lenders. This customer driven ‘self-reporting’ of data (on the basis it required consent from the individual or business) is changing the customer dynamics for the credit information providers with individuals and businesses also being seen as the ‘customer’ and more and more directly engagement with them as a result.
Is this really the case I hear you ask? Well, you only have to look at the advertising campaigns about ‘boosting your credit score’ and ‘taking control of your credit score’ to see that it is already taking place. Another example of the move to customer driven ‘self-reporting’ is the increasing ability for consumers to supply their property rental data to the credit information providers through specific organizations that have been set up to collect the data from individuals. This whole area was supported by the UK government with its Rent Recognition Challenge in 2017.
Further afield (particularly in the Far East) the data landscape is also changing as a result of the growth in e-commerce platforms. In countries where credit information is less developed this type of data is increasingly being used to grant credit to individual and businesses. As a result, such platforms are moving from e-commerce operations to also beeing credit information and financial service providers challenging the current players in the market. One well known example of this is Alibaba with is Ant financial arm.
As these platforms play an increasing important role in the provision of finance there has been some concern over the fact that they operate outside the financial services regulatory infrastructure that protects individuals and businesses and prevents systemic shocks. In China where a number of the e-commerce platforms are based action is now being undertaken to ensure tht the financial services arms are required to obtain the necessary licenses and permissions.
So, taking all of these developments into account there is no doubt that the data landscape is changing and will continue to change further as a result of the pandemic and the move is digital. So, what is going to happen with all this new alternative data? Will credit providers be able to use it? Will it replace traditional data or work alongside it?
There is no doubt that traditional data sources and risk models may not be fully updated and well-calibrated to provide an accurate assessment of an individuals or businesses capacity to repay in the post-pandemic reality. Traditional rise models, whether offered by credit information providers or built-in house by credit providers, will need to be adapted.
As the same time new analytical tools will be required to analyze the new alternative data that is available and incorporate it with traditional data to optimize the credit risk assessment. With the volume and velocity that the new data brings there is a need for new technology to be able to process and analyze it. Hence the interest in the industry in Artificial Intelligence (AI) and Machine Learning (ML) applications.
Credit information providers are already undertaking a lot of work on how these new technologies can be utilized internally and externally for clients and credit providers should expect to see new products and services being developed using these tools.
In any application, the key to their acceptance will be the transparency and explain ability of the decision that is made. The openness of the process is probably not an issue when the ‘computer says YES’ but it will be an issue when the ‘computer says NO’. These concerns have already been picked up by regulators who are keen to ensure that there is transparency about what data is being collected on individuals and businesses and how it is being used. Governments and regulators have been struggling to catch up with the fast-paced developments in AI and ML but are now starting to look to take action. For example, the EU has recently laid out its proposals for regulation of AI which could have far reaching consequences on its use. Discussions are also starting in the US on the subject.
The move to digital services spurred on by the pandemic can provide significant benefits to individuals and businesses but it can also lead to an increase in financial crime such as cyberattacks, fraud, data breaches and money laundering. For credit information providers these risks provide an opportunity, using their data and analytical capabilities, to offer services to credit providers to help identify and limit the risks. They have also highlighted their own vulnerability being such a key part of the financial ecosystem – recent high profile data breaches have highlighted this.
At the Business Information Industry Association (BIIA -www.biia.com) we have seen significant investment over the last couple of years by the credit information industry in both securing their own infrastructure and acquiring businesses to support credit providers in combating the growth in finance crime and it is likely that we will see continued investment going forward.
With the growing availability of data and the use of new technology there are growing concern from governments and regulators about how individuals can maintain control over the use of their data and how their privacy can be protected. As a result, privacy regulations based on the EU General Data Protection Regulation (GDPR) have been implemented in a number of countries around the world. In some cases where the GDPR has been ‘cut and pasted’ into the new regulation it has resulted in some unfortunate unintended consequences such as limitations on the access to the data from outside the country and specific requirement on consent which have in turn had an impact on the development of the credit information infrastructure. In Europe we are also starting to see as anticipated further clarification on the interpretation of the GDPR. Some of this interpretation could have an impact on the availability of data to credit information providers at a time when it could be argued that more data is required.
It is clear with all that is happening that the world is going to be a very different place for credit information providers as we exit the pandemic. The changing data landscape and new technology will change the focus of the credit information industry from one of data providers to value added service providers using their analytical and technology capabilities to deliver the services that credit providers will need to deliver their services in a digital world.
* Neil Munroe, CICM, Managing Director, CRS Insights Ltd, Deputy Managing Director, BIIA, Deputy Chair, International Committee on Credit Management (CCIM) magazine.
BIIA is the international co-operation partner of Open Password .
Compliance Gap
Refinitiv Survey Reveals True Impact of COVID-19
on Supply Chain Due Diligence
(BIIA) “COVID-19 plunged many organizations that already had fragile third-party networks into an uncertain, turbulent and very competitive market and forced them to rapidly expand their vendor network as they struggled to protect critical supply chains from disruption. Looking back at the lessons learned over the past 16 months, it is clear that businesses must close the compliance gap and focus on building a resilient supply chain with due diligence and financial crime prevention at its core,” said Phil Cotter, Global Head, Customer & Third-Party Risk, Refinitiv. “As organizations slowly recover from the COVID-19 impact, we expect an increase in technology investment as they seek new ways to address customer and third-party risk challenges.”
New research shows only 44% of organizations conducted third-party due diligence checks during the COVID-19 pandemic, as companies struggled to prevent extensive supply chain disruption by creating new third-party relationships. Refinitiv, an LSEG business, one of the world’s largest providers of financial markets and infrastructure, has published the findings of its global risk management survey. The report highlights how the COVID-19 pandemic substantially increased customer and third-party risks, and that technology holds the potential to help organizations respond to the risk challenge.
The survey found that respondent organizations were under mounting pressure to increase revenue (73%) and profits (65%) due to the COVID-19 pandemic. As their organizations were burdened to keep operations and disrupted supply chains running, the survey found that 65% of organizations took shortcuts with KYC and due diligence checks – significantly increasing their risk exposure. Only 44% of respondents conducted initial formal customer or third-party due diligence checks, a 5% drop compared to Refinitiv’s 2019 survey (49%).
When it comes to due diligence checks, by region, Europe was the lowest performing (40%) while Sub-Saharan Africa (56%) the highest. A focus on rapidly forging new third-party relationships also created an environment with reduced sanctions screening, with only 40% of organizations making screening a priority and 56% of respondents admitting they did not fully manage risks related to sanctions screening.
Regulators also eased pressure on organizations; compared to Refinitiv’s 2019 report, pressure from governments (75%), regulators (67%) and corporate boards (64%) was significantly lower during the pandemic. The new remote working culture during the pandemic made it more difficult for organizations to manage cyber risk, as 71% of organizations stated that operating with a remote workforce made cybercriminal attacks harder to contain. This was the impetus for half (51%) of organizations making cybercrime a priority during the pandemic. Fraud was also a big focus, with companies dedicating substantial resources (20%) to combating this aspect of financial crime, followed by 16% for money laundering and 14% to cybercrime and theft.
To download the Refinitiv report ‘Global Risk Management Report 2021: How data, technology and collaboration are reshaping risk, please visit: www.refinitiv.com/en/resources/special-report/global-risk-and-compliance-report
BIIA (Hong Kong) is the international co-operation partner of Open Password.
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