Money@Risk: A forecast model for assurance

The speed and direction of change drives evolution. Organizations which can adapt to new circumstances will thrive. Others become extinct. The theories of Charles Darwin and Ludwig von Bertalanffy apply to businesses too. As a discipline, revenue assurance must evolve, in order to address the changing risks and priorities in the communications sector. I want to write today about a necessary evolution in the methods of revenue assurance: developing a forecast model that enables quantified forward-looking risk-based assurance.

In 2001, David Smith wrote Successfully Managing Revenue Assurance. In that report, he stated all the key principles of revenue assurance. However, the discipline of revenue assurance has not changed so greatly since then. It is practised far more widely, but its methods still concentrate on assuring the operational flow of transactions after they take place. Sometimes this operational flow is from switch to bill, sometimes from order to cash collection, and sometimes from prepayment to charge. This suits a fairly static model of how customers interact with communications suppliers: they consume a certain volume of services and pay for them accordingly. However, the communications industry is changing. It faces huge pressure on profitability, and is hungry for capex, whilst revenues are threatened by new business models. In such changing circumstances, we must adapt to thrive. With this in mind, I propose the development of a new technique – Money@Risk – which risk and assurance practitioners can use to forecast changes and hence evaluate the forward-looking benefits they deliver.

The model is based on two forces that fight each other: good versus bad. The good I refer to as the Performance Factor (PF), and the bad is the Risk Factor (RF). The allies of the good are controls performance and maturity. The allies of the bad are activity growth and vulnerabilities in systems and processes.

The telecoms industry is exposed to leakages and losses due to a variety of factors:

  • Complexity of revenue generation processes from activation to revenue. Telcos go to market with intense competition pressure, huge product portfolios, and very complex tariff plans to set up and maintain.
  • Billing systems (online and offline) face growing complexity, volumes and types of transactions to bill (event based, content based, time based, bundles, etc).
  • Technology ruptures imply IT and networks will need continual investment and development. Telcos must manage interdependency between service platforms as the frontiers between information technology and network blur. Meanwhile, new network paradigms are emerging.
  • The interconnection ecosystem grows more and more complex. The “cloud” is turning into the “cloud-net”, a place where managing settlements, and where maintaining security and quality of experience becomes more crucial and more challenging.
  • Regulatory demands are rising, causing pressure on prices and margins, whilst increasing legal liability.

When we look at the spectrogram of our discipline we can make some general observations:

  1. By adopting reconciliation techniques (duplex, circular…) most RA teams are mostly engaged in performing traffic assurance rather than other aspects of revenue assurance.
  2. Point 1 is a consequence of a bottom-up approach instead of a top-down approach. RA teams track gaps in EDRs even while we know that there is less correlation between traffic generated and revenues earned.
  3. Point 2 is the result of not having a global approach, and because risk evaluation has not been incorporated into our way of working.

In the past, Leonardo da Vinci had a mind that was big enough to encompass all forms of learning, from the art to science to medicine. Now the world is too complex; there are no more Leonardos. We struggle with point 3, even though nobody can possibly know everything about networks, information technologies, processes, people, business rules, and the exponential growth in traffic. In short, we face too much complexity!! And that results in…

  1. …we are sometimes lost in transition, with new technological and business models rupturing around us, and it becoming harder and harder to get to the root cause of a problem.
  2. …losses which affect all aspects of the P&L – costs, profits and margins – as well as revenues.

To address our industry challenges, assurance practitioners have developed a three-legged approach: Prevent – Detect – Recover. But we still missing the fourth leg… and guess what happens if you sit on a chair with only three legs?

We need a fourth leg, and a global comprehensive approach, to better understand the drivers of our work. Forecasting is needed to complete our assurance picture. Without forecasting, we are only reacting to the history of how money was made in the past, not the scale of challenges in Money@Risk assurance we need to address now, to contribute to the telco’s future profitability.

If someone objects that some chairs have only three legs (or maybe just one leg), I may answer that three-legged chairs have fewer than the mean average, statistically speaking. There are good reasons why the makers of chairs favoured four legs over three! As in all things, the best evolutionary designs combine practicality, robustness, efficiency…

My proposal is that we form a community to develop a Money@Risk model. I am looking for volunteers to work with me to refine and develop this model. Here are the arguments for why people should take part:

  1. We need Money@Risk to negotiate for adequate budgets and be a significant part of the corporate business plan, alongside our colleagues in Marketing, Finance, Sales, IT, Networks…
  2. We need to gain credibility by moving away from the currently fragmented approach to RA, fraud and security, toward a more integrated model. We can do this by creating a ‘Pontifex’ between these disciplines.
  3. We do not currently have enough influence when talking to c-level execs.
  4. We do not have a clear position within the ‘magic triangle’ formed by Finance, Business Operations, and Technology. We must constantly develop a ‘comprehensive’ range of skills and methods to face the growing complexity of processes and technologies.
  5. We must also be more and more ready to disclose losses and share performance benchmarks. Whilst we might retain anonymity, we cannot afford to be conservative about sharing numbers; we need data to improve the work we do. The taboo against sharing is outdated. When public and private companies already publish major financial figures (net income, investments…) it becomes very trivial to consider that publishing and sharing assurance figures could cause serious damage to the business.
  6. We need to change the name of our discipline from revenue assurance to money assurance, to become more generic and cover a wider domain. We should intend to address all the key aggregates of the P&L: revenues, costs and profits.

I don’t pretend to have all the answers to the questions I raise. However, I know that our discipline must change. In the communications sector, the direction and speed of change is itself changing. We must anticipate, if we are to thrive.

To begin with, I would like to connect with people who agree with the need to develop a Money@Risk forecasting model. Please get in touch by emailing me at, or by leaving a comment to this article. If there is sufficient interest, I will look to publish more articles that develop the basics of a Money@Risk model. For example, I would be glad to share my preliminary work on the variables within the model, the KPIs, and the graphs and tools that I have tested and used in operators whilst dealing with fraud, RA and security issues.

My aim is to encourage feedback, and so collaboratively create a fourth leg to our chair that we can all rely upon. Over time, and by incorporating the feedback received, these articles can then be brought together into a single white paper. But before I rush ahead and publish such a paper, I want your involvement and support. What do we have to lose? We already have three legs but we cannot sit comfortably when there are many risks that may topple our chair. What do we have to gain? A better and more comprehensive response to the risks we face.

Malick Aissi
Malick Aissi
Malick is an experienced telecommunications consultant and contractor, specializing in revenue assurance, fraud and business development. He is the former Head of Technology and Solutions for Fraud and Revenue Assurance at Orange Group. Malick has held diverse responsibilities in Finance, Management, Marketing , IT and Network management.

Malick's current focus is to develop a Money@Risk forecasting model for assurance. He welcomes queries from anyone who wishes to know more about the project, and from those who would like to join the project team.   You can contact Malick at