The Risk & Assurance Group (RAG) roadshow visited Kenya last week, with Safaricom hosting RAG Nairobi in the dedicated conference facility at their head office. The attendance exceeded expectations; the room was packed with over 100 participants, including employees from 20 different telcos. The agenda was equally crowded, with too many presentations and panels to review them all. Here are five of the most important takeaways from the event.
1. Safaricom Proves Africans Are Amongst the Global Leaders of Telecoms Risk Management
One of the laziest assumptions is that African professionals need to follow the examples established in rich, white, Western countries. That supposition was already undermined by findings shared at RAG Johannesburg 2017, but RAG Nairobi provided further evidence that the top African telcos take risk management more seriously than most of their counterparts around the world.
The way Safaricom is organized illustrates how the best telcos integrate risk management into decision-making. Nicholas Mulila, Director of Risk Management at Safaricom, explained that he reports to both the CEO and to the Audit Committee of the Board. He oversees several departments, who between them cover: security, enterprise risk management, business continuity, fraud, revenue assurance, anti-money laundering, ethics, compliance, and more. This model compares favorably with the majority of telcos that allow risk responsibilities to be spread around disparate managers, with no meaningful attempt to harmonize the assessment and quantification of risk, and no reliable mechanism to discuss overall risk priorities with independent board members.
2. Anti-Money Laundering Should Be Linked to Fraud Management and Other Risks
The panel discussion about mobile money was perhaps the most keenly anticipated session of the conference, and the audience was not disappointed. Mobile money is simultaneously a tremendous business opportunity for telcos, a powerful enabler of the wider economy, and a source of greatly heightened risk. Successfully managing those risks is vital if telcos are to generate healthy profits whilst also being good corporate citizens, and there is no risk more serious than that posed by criminals and terrorists who want to hide behind the relative anonymity of a SIM card in order to launder and move money.
Safaricom is part-owned by Vodafone Group, so the influence of Vodafone and Vodacom was felt at the conference, and especially on the mobile money panel. Whilst AML is a separate specialism, a strong argument was made for linking the management of this risk to the prevention and detection of fraud. Audience feedback confirmed that AML should be given more time on the agenda of future RAG events, and this is an area where RAG can do more to facilitate cooperation between telcos. RAG will be looking to engage with Vodafone and other groups with an interest in mobile money.
3. Rapid Progress Delivers Better Results in MTN
MTN Group brought seven members of their RAFM team to Nairobi, and that group took turns to describe aspects of an innovation program that had delivered significant results in three areas: robotics, billing accuracy and machine learning. The most striking aspect of their project mentality was the limited time they permitted themselves. Each of the three project packages was designed to deliver results within just 12 weeks.
There is insufficient space to recount the details here, but the results achieved by the MTN innovation projects were exceptional. MTN’s success demonstrates the importance of momentum. Many managers who pursue change find themselves distracted by the inevitable twists and turns of their day-to-day job. The energy of a team effort is dissipated if the work is spread over too long a period of time. An agile mindset and narrow timelines gave MTN little choice but to succeed. Though RAFM managers may complain their teams lack the time to foster change, MTN’s example suggests that any RAFM function could benefit by tasking themselves to deliver incremental improvements through short and well-defined bursts of activity.
4. Machine Learning Is Beneficial, but Not All-Powerful
It is noticeable that those industry associations dominated by software vendors now talk loudly and repeatedly about the benefits of machine learning for managing certain kinds of risks. This fits a pattern where technology is presented as the primary solution to all problems. The tone taken at RAG Nairobi was noticeably different. There was plenty of agreement about the benefits of machine learning, not just from vendors but also from those telcos familiar with its use. However, they also talked sensibly about the limitations of machine learning, and the need to use other techniques as well.
The self-control exercised by vendors at RAG Nairobi was admirable, and shows how much can be accomplished when vendors and telcos genuinely pursue a mutually advantageous relationship. Instead of being subjected to unwarranted hype, the audience heard specific and realistic examples of what can be achieved with machine learning. The recurring sponsors of RAG now effectively police each other; they all moderate their claims to avoid an escalation of unsustainable boasts that would discourage telcos from returning to RAG events. Perhaps the best advocates of machine learning were not from a vendor, but from MTN’s team. It is heartening to think that our profession is attaining a level of maturity where we prefer to impart honest advice based on successes that can realistically be reproduced elsewhere. This kind of modesty might encourage more rapid adoption of new tools, techniques and technologies, because there will be less reason to be cynical about the claims made by their proponents.
5. The Demand for Education Is High
We live in a digital era, but it was briefly necessary to revert to pen and paper when MTN asked me to sign a physical contract. I was glad to do so; the agreement will allow RAG to share many more of MTN’s training courses via RAG Learning, the online training platform.
Two new courses on mobile money and risk management principles have been added already, and more will be uploaded soon. I used the conference to discuss the need for better education with many of the telcos in attendance, and they were all excited by the prospect of gaining access to high quality online training courses at zero charge. This is hardly surprising; we all know the importance of education to career success. MTN have taken a lead with their generosity, but I hope their efforts will now be matched by other big groups, like Vodafone, who also see the potential to combine efforts for the betterment of every professional working in this field.
We want common standards and widespread cooperation in the way we tackle risk, because we work in a fundamentally connected industry where the challenges faced by one telco are likely to become issues for other telcos too. It makes no sense to pursue common objectives whilst adopting an inconsistent and desultory attitude to professional education. We all understand the barriers to working together, but the enthusiasm for the common online education program also shows there is a great desire to surmount the obstacles. We can do it, but only if we combine our efforts and resources through a single education platform for all telecoms risk and assurance professionals worldwide.
The risks faced by African telcos are both challenging and stimulating. Telcos like Safaricom should be considered genuine world leaders. The importance of their M-PESA mobile money service to the Kenyan economy was confirmed by a visit from the Deputy Governor of Kenya’s central bank during the second day of the conference. Safaricom and other African telcos will inevitably be leaders in managing risks for the services they pioneer, and the expertise of African risk professionals will consequently need to be shared with telcos across other continents.
It was good to have so many of Safaricom’s team sharing their knowledge with their African peers. The Safaricom team also expressed satisfaction at what they had learned from the other attendees. Safaricom were generous hosts, and the audience responded in kind. This gives me further reason to believe that RAG should hold one major conference in Africa each year. The African chapter of RAG should also continue to grow, and so help to develop more of the talent found across this vibrant continent. Our discipline tends not to be supported by academia, and that means professionals must also act like professors. In Kenya we saw an even-handed respect for teaching and learning, and this should inspire more Africans to become global leaders in telecoms risk management and business assurance.