Risk is defined as exposure to the chance of injury or loss, or a dangerous gamble. For an enterprise organization, risk is not something to take lightly – especially when related to financial performance and outcomes.
Financial risk can appear in many forms, but the most common are waste, misuse and fraud. The real cost of these discrepancies can quickly begin to add up in organizations that are continually spending large sums of dollars through card programs and with vendors but have limited monitoring capabilities.
Frequent account activity makes it all the more critical to understand your company’s spend risk so your finance teams can mitigate potential financial losses more efficiently. The bottom line is control spend to manage risk.
The problem is that most organizations rely on manual processes to identify the most obvious issues but are blind to broader patterns of non-compliant spend behaviors and abuse. So, how can these organizations control spend if they don’t have any visibility into risk across vendors, departments and employees?
Combatting Spend Risk With AI
Organizations that successfully identify spend risk can better adjust policy and take the needed proactive measures to reduce the impact of similar future spend decisions.
How do they do this? With an Integrated Risk Strategy. Traditionally, the three lines of defense tasked with spend risk mitigation – finance operations, compliance and internal audit – operate in siloes, with little interaction or collaboration.
An Integrated Risk Strategy provides the three defense teams with a single view of risk across an organization, using an AI-driven platform that monitors 100% of transactions. With this unified view in place, all three defense lines share the same level of forensic analysis capabilities, making risk management an AI-powered real-time effort.
Using continuous monitoring, the spend risk in any organization can be identified quickly and categorized, helping to understand and diminish financial loss.
What’s more, AI elevates the role of the finance teams, shifting their job from a clerical function to a strategic one. As the monitoring process becomes automated, these professionals can focus on how to best eliminate spend risk and further improve efficiency.
At Oversight, we are continually analyzing customer data on an individual and holistic level to identify spend risk trends and insights to better inform organizations about new and increasing risks at the enterprise level.
Recently we launched our Spend Insights Report during the coronavirus pandemic to help understand and mitigate financial risk – which is especially critical at a time when organizations are under increasing pressures to monitor financial health during this uncertain period.
Check out our recent July Spend Insights Report, which details some of the new behaviors that have resulted from the virtual workforce transition, including a drastic increase in misuse and fraud, despite a decrease in T&E spend, and best practices for mitigating the associated risks.