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START-UP TO SCALE-UP: NAVIGATING INTERNATIONAL EXPANSION

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By Nicky Tozer, VP EMEA, Oracle NetSuite

 

Once an organisation has experienced success at home, international expansion is often seen as the logical next step. It might be to simply expand the potential addressable market, gain market share quickly with a unique offering, or to support your customers’ operations in other countries.

But whatever it is, there is no denying that entering foreign markets can be an opportunity to diversify operations and tap into new talent, revenue and raw materials.

But international expansion comes with some very specific challenges, not least cultural differences, language barriers and competition from home-grown players. This can be particularly challenging for high-growth organisations that often find themselves expanding rapidly without established structures and processes, lack of experienced staff, stretched resources and a strategy that is also evolving as they grow.

For finance teams in particular, there will be unfamiliar legal and regulatory regimes to navigate, local tax obligations to observe and the effects of currency fluctuations to manage. A slip-up in any of these areas can have serious consequences.

There’s no two ways about it: going global can be a risky business, but the potential rewards are high.

 

Getting up and running in new markets

For many organisations that have successfully conquered new markets overseas, cloud technologies have provided a way to get up to speed rapidly, enabling them to focus their efforts on taking advantage of the fresh opportunities that fast-growing international economies offer.

From a financial point of view, running a business on a global, cloud-based platform is a good way to avoid the upfront costs and delays associated with implementing new software and servers in local data centres, since applications are accessed via a web browser on a pay-as-you-go basis. In other words, much of the IT investment needed to start a foreign subsidiary can be made in the form of operational expenditure and switched on, ramped up or scaled down as needed.

It also means that finance and operational teams in newly-established overseas outposts can quickly get access over the internet, to the same shared platform as their colleagues in the company’s home country. Information is handled in the same consistent shared format and finance leaders at company headquarters get the benefit of real-time insight across international operations.

Deploying a multinational business management system should also help eliminate ‘audit angst’. Around the world, tax requirements – particularly indirect tax requirements – are always changing. Keeping up with VAT changes, for example, can place a considerable burden on finance teams. A business management system will help when setting up in new markets by providing an audit trail of tax compliance, automated configuration of tax codes and enforcing standardised workflows to ensure requirements are met.

 

Simpler consolidation, global oversight

As a company expands internationally, there will always be a need for finance staff at HQ to consolidate and reconcile data from overseas operations in order to provide a complete and accurate picture of the state of the business across all markets.

Where companies have allowed local teams to implement their own local finance systems, this can be a real headache. By contrast, where they have extended use of the company’s global, cloud-based business management system to new outposts, it’s vastly simplified.

With simpler consolidation comes more oversight, in the form of global reporting and analysis. Finance leaders have better insight into the performance of individual regional subsidiaries and the ability to see how they are performing against other regions, based on enterprise-wide KPIs displayed in real-time on dashboards, for example.

Management teams and investors get better, more reliable and more timely information. In this way, it’s possible to judge how a global expansion strategy is working out, providing vital opportunities to reassess or rethink that strategy, if needed.

Plus, automation can take much of the strain when it comes to consolidation, intercompany accounting, auditing and bank reconciliations across multiple countries, when operations in those countries use the same system.

 

Standardisation, but with local customisation

While standardisation is the goal, that’s not to say that an expanding business should enforce a ‘one-size-fits-all’ approach across international operations. Accommodating different business cultures is important across markets.

In fact, when it comes to choosing a business management solution, any business with global expansion ambitions should ensure that the system is able to handle multiple currencies, tax regimes and legal frameworks.

Local employees may expect to use applications in their own language and local workflows may be required to fit with ‘the way business is done’ in a particular jurisdiction.

In other words, a global system must be able to support local configurations within the shared system so that subsidiaries can comply with their own market needs and regulations, but also continue to meet the consolidation and roll-up requirements of the wider business to which they belong.

Going beyond domestic borders can be challenging and daunting. But these fears can be reduced by deploying a ‘support system’ capable of underpinning international growth. Smaller business finance applications generally struggle to scale at the speed demanded by a growing organisation – it hinders growth, information and doesn’t create actionable insights. The successful scale-ups I have worked with have shared an appreciation for how technology can help them thrive. Whether embedding it into products or using it to crack new markets, forward-thinking organisations see that business management software provides solid foundations for growth.

 

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Business

Mitigating the insurance risks of climate change through geospatial data visualisation

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Richard Toomey, Senior Manager, Commercial Insurance at LexisNexis Risk Solutions UK and Ireland

 

In the lead up to the 26th United Nations Climate Change Conference of the Parties (COP26)[i] November 2021, A United in Science report[ii]  provided a stark warning of the impact and acceleration of climate change. The UK Environment Agency also warned of more extreme weather leading to increased flooding and drought[iii]. While some progress was made at the conference, understanding the changing risks created by extreme weather to price property insurance more effectively, and more importantly, to help mitigate the physical risks posed by climate change, has become imperative.

Mapped geospatial data intelligence including live data on flood warnings and river flows, viewed alongside data held by insurance providers on the properties in their portfolio, can be a key ally in helping to protect customers and reduce claims losses created by extreme weather events.

With the air temperature rising and heavy rain becoming more and more frequent due to climate change insurance providers are looking to identify properties that are more at risk than others. For example, properties with basements carry more of a substantial risk of surface water claims than others and especially in London where space is tight and water runoff is low. In the autumn of 2021, the industry saw a number of high value claims due to basement flooding. There are some really large high net worth (HNW) households with big basements which carry a significant insurance risk.  The problem is that in many cases insurance providers don’t know if they have a property ‘on cover’ that actually has a basement.

The huge and growing volume of data now available to the insurance market to assess property risk to the level the industry needs, could easily overwhelm and prove a barrier to the swift decisions needed in weather-related surge events. However, the evolution of desktop based geospatial data visualisation tools such as LexisNexis® Map View means insurance providers can make quick, informed decisions based on a picture or map of risk, looking at a specific geographical region, a postcode, an address or a single property outline.

They can look at environmental risks including flood, fire and subsidence and live flood data updated every 15 minutes direct from the Environment Agency, as well as highly predictive flood risk data from respected flood modelling organisations. Insurance providers can also bring in data on the characteristics of a property to understand more about its construction, including the type of roof it has, how many floors there are, the square footage, as well as further data on the location and the individuals behind a business to gain a more holistic understanding of risk for pricing.

Mapping of historical flood data brings a further dimension to the understanding of risk, revealing the maximum extent of all individually recorded flood outlines from rivers, the sea and groundwater springs in England and Wales. This takes into account the presence of defences, structures, and other infrastructure where they existed at the time of flooding and includes floods where overtopping, such as at seawalls, river breaches or blockages may have occurred.

But the real step-change for the market has been recent ability to view live flood and other environmental data in tandem with customer and policy data held within an insurance providers’ own databases.

Crucially, this means insurance providers can pinpoint down to individual properties, the policyholders most at risk as weather events unfold, should a river burst its banks, or a flood barrier fail and those properties that may actually be vacant at the time of the event.

Through data visualisation tools, insurance providers can gauge where flood water may go so that policyholders can be warned to take measures to protect themselves, their possessions and to move any vehicles to higher ground. They can even see where roads may have been closed due to fallen trees. All this intelligence helps with planning on the ground resources, working with local authorities and claims adjusters. Then, in the immediate aftermath, rather than wait for a deluge of claims, insurance providers are in a position to reach out to customers known to be in areas affected to support them through the claims process.

The inherent flexibility of today’s geospatial data visualisation tools for the insurance market means risk can be assessed as needed or as constant monitor for a whole commercial property portfolio. Fundamentally these tools are designed to streamline the assessment of property risk.

In the future, commercial and residential property claims data gathered from the whole of the market may allow insurance providers to look at a whole portfolio alongside past claims, but for now they can bring in their own claims data to build a more granular picture of risk, to price more accurately and understand how they could help mitigate future claims and potential losses caused by weather events.

A picture can say a thousand words and data visualisation tools can certainly make highly complex risk data easy to understand and act upon. Being able to instantly visualise an environmental risk to policyholders – day or night – using highly granular data on past and present flood events puts insurance providers in a more powerful position to reduce the misery and costs caused by extreme weather.

[i] https://ukcop26. org/wp-content/uploads/2021/07/COP26-Explained. pdf

[ii] https://public. wmo. int/en/media/press-release/climate-change-and-impacts-accelerate

[iii] https://www. gov. uk/government/news/adapt-or-die-says-environment-agency – The Environment Agency’s third adaptation report October 2021

 

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What should you be know about PAN data in PCI DSS?

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Narendra Sahoo (PCI QSA, PCI QPA, CISSP, CISA, CRISC) is the Founder and Director of VISTA InfoSec

 

Introduction

PAN Number or Primary Account Number as we call it is a very sensitive data often used when making online payments or transactions. Customers often share this data with merchants from whom they purchase products or services online. However, customers do expect the merchants and financial institutes to protect the data and prevent incidents of threat. Storing the PAN data for most merchants is a necessity as they may have a legitimate business reason to store cardholder data. But storing PAN data has its share of risk on a business’s network security. Over the years businesses have been storing this data on their server for easy and quick access without realizing the risk it holds and the impact it may have on business.

In fact, most of the data breach incidents that have occurred over the years are due to the storage of unencrypted PAN data on the merchant’s/Service Provider’s servers. While the PCI Council clearly states not to store PAN data yet most merchants for increased consumer convenience store PAN data on their network. Storing customer’s PAN data increases the security risk and, also increases the scope of PCI compliance. So, unless businesses have a legit commercial reason to store PAN data, should not store it. Covering more on this in detail we have today shared details about PAN data and PCI DSS that businesses must know to ensure compliance. So, before getting straight to it let us understand the term PAN Data.

 

What is PAN Data?

PAN Data is basically the 15 or 16 digit numbers on the front of your debit/credit card which is also known as the Primary Account Number. They are also called payment card numbers and are often found on payment cards like credit and debit cards. The PAN account number is printed or embossed on the front of this payment card. The PAN number is issued by customers to merchants at the Point of Sale (POS) that identifies the issuer and the cardholder account while making payments. Customers when making an online purchase share the PAN number to make payments online. These PAN details are used by the merchants to process the payments online.

 

How does PAN Impact PCI DSS Compliance?

Payment Card Industry Data Security Standard clearly states that merchants dealing with online payments or accepting credit/debit card payments must avoid storing sensitive PAN numbers. The PCI DSS Requirement 3 addresses the protection of stored cardholder data. So, considering the storage of PAN data will automatically increase the scope of PCI DSS Compliance for the merchants. This way merchants will have to take additional measures for securing the stored PAN data in the network.

Storing unencrypted PAN data on the network will increase the potential risk of breach and end up having a significant impact on business. It is therefore necessary to secure PAN Data in form of encryption or other techniques as suggested in PCI DSS requirements. Explaining the requirement we have shared the PCI DSS data storage requirements in detail.

 

PAN Data storage in PCI DSS

Merchants may at times for commercial purposes may have to store PAN Data in their server. For these reasons, they will have to take extra precautions and implement additional measures to ensure the security of data and compliance with PCI DSS. The PCI Council outlines the requirement of encryption of cardholder data stored with the merchant. However, it is important to note that not all elements of cardholder need to be encrypted when stored on the server. It is only the PAN data that needs to be encrypted, the rest of the Sensitive Authentication Data (SAD) such as Stripe Data, are not allowed to be even stored by merchants.

What is more important to know and understand about PAN Data storage is that the only times that PAN is not considered to be cardholder data would be when details such as the the cardholder’s name and/or expiry date are not mentioned.  But this does not really happen and so merchants will have to implement measures to secure PAN data. Merchants must equip their data network to deal with PAN securely especially when it is transmitted at the POS.

Moreover, PCI DSS requirement 3.4 states that all merchants must use one of the following techniques to render PAN unreadable. This requirement applies when the PAN Data is stored or when the data is at rest anywhere including portable digital media, backup media, and logs. The techniques of rendering the PAN data unreadable includes

  • Strong cryptography of the PAN
  • PAN truncation (removal of the middle digits),
  • Index tokens and pads
  • Key-management processes

PCI DSS requirement 3.3 specifically requires the PAN data to be masked whenever on display. So, this way, the only digits of the PAN that may be visible are the first six and last four digits. With this only authorized businesses with legitimate commercial needs can see the rest of the information.

 

Final Thought

Despite all the clarity given in terms of the possible threat with storing PAN data nearly 65% of the merchants continue to store unencrypted PAN data on their servers and network. Further, what adds to the problem is that merchants are not able to handle and appropriately secure these stored PAN and cardholder data. Understanding the importance of PAN data and securing them is crucial. This is to prevent incidents of breach and theft. So, the only possible way to prevent this is by implementing measures of defense for handling such sensitive data. Ensuring that the PAN is  protected using one-way hashing or truncation methodologies is one way of assuring the customer’s security of the cardholder data. This way it would also help businesses ensure maintaining PCI DSS Compliance and securing sensitive data.

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