Economic risk and staff churn threaten security outsourcing

From ClearSale analytics team to PaymentsSource: Just as logistics and marketing are complex enough to require professional help, fraud is now so pervasive and customer expectations are so high that retailers can benefit from investing in expertise.

Until recently, most retailers handled much of their fraud prevention in-house. As the frequency and complexity of fraud grow, more third-party fraud-prevention providers offer supplemental or outsourced fraud prevention. These vendors can take the staffing and skill burden off merchants, but decision-makers who are used to a fully in-house program may have doubts.

But there are challenges. Onboarding any third-party service requires research, conversations and careful consideration.

One risk that's rarely mentioned in the fraud-prevention market is having too much of a retailer's fraud prevention strategy concentrated in a few resources or activities, with nonexistent or inadequate contingency plans. Just as merchants risk their in-house fraud experts leaving and taking their knowledge with them, merchants can also face the prospect of a fraud-security vendor going out of business.

To reduce this type of risk when outsourcing, retailers should ask prospective vendors about their backup plans and do due diligence to ensure the vendor has the resources to maintain and grow its capabilities.


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