What are the fraud risks for the first ever African-hosted World Cup?
The eyes of the football world were on South Africa in June, as the Confederations Cup, the dry run for next year's World Cup, kicked off in Johannesburg.
The event is being used to test the infrastructure and logistics of some of the venues before next summer's World Cup finals. During June and July 2010, South Africa will be playing host to the FIFA World Cup tournament, the first time the continent will have hosted the finals. The event will bring much excitement and many economic benefits but will also see a range of organisations exposed to extreme levels of risk.
Due to the high profile nature of the tournament, an event such as the FIFA World Cup is an ideal opportunity for fraud and risk managers to strengthen their mitigation strategies which can be continually utilised after the event to provide a more solid platform for business in the future. Fraud and risk managers should look to the tournament as a means to gain exposure within their businesses to leverage this exposure to encourage investment in fraud prevention processes and systems.
About the tournament
This prestigious event consists of 64 matches played in ten stadiums spread over nine South African cities. It is expec
ted that approximately 450,000 visitors from all over the globe will visit South Africa during the event. As hosts to the FIFA World Cup, South Africa can expect to benefit from many of the associated socioeconomic advantages that often accompany such an event. Improved public transportation, local facilities, increased employment and many other positive factors are all associated with global sporting events like the FIFA World Cup.
Unfortunately, in addition to these opportunities, such events can also attract criminals with increased opportunities to commit fraud. Large volumes of foreign visitors and increased spending during such an event all provide cover for fraudulent activities. Financial institutions are likely to feel the impact of such fraud more than any other collective business as they are at risk from a number of different criminal operations. In order to be protected against such fraud, financial services organisations will have to be prepared and processes in place which will protect the institution without impacting the legitimate consumer.
A new Experian white paper explores the vulnerabilities of the South African financial 
services sector and provides an overview of best practice mitigation strategies for reducing the risk of fraudulent activities during and after the World Cup tournament. From simple processes to complex fraud detection systems, there is a wide range of solutions which can be adopted to reduce the exposure to fraud during the tournament and for years to come.
Fraud risks
Topics such as ‘Common Risks’ are explored in the white paper and the likely impacts of transaction fraud, counterfeit documents, application fraud and various other deceptions that are deemed high risk are considered. A key common risk identified from previous international events of similar stature is around credit cards. Due to the increased volume of credit and debit card transactions expected around the time of the tournament, organised criminals may be attracted to the area to use counterfeit credit cards.
These cards are likely to be foreign cards and may have been imported from abroad specifically to be used during the tournament to hide the transactions amongst the legitimate spends of the tournament attendees. Using foreign cards also allows counterfeiters to get away with using lower quality cards as the merchants will not necessarily be familiar with handling foreign cards and can be unaware of relevant security features etc.
Mitigation strategies
Another key area outlined in the White paper is ‘Risk Mitigation’. As with all risk mitigation, individual institutions need to undertake a threat assessment to review their individual vulnerabilities to establish what level of mitigation / protection is required and relevant for their business.
There are a number of mitigation strategies which institutions may wish to implement in preparation for the increased risks expected to accompany the World Cup tournament. The most effective method of reducing fraud levels is to prevent the fraudulent transactions from taking place in the first place. Proactive measures such as staff training can help reduce the likelihood of criminals successfully perpetrating fraud.
‘Reactive Measures’ of mitigation are also an important factor in how organisations protect themselves from the relevant risk at the World Cup tournament next year. The monitoring of activity and the process of data and intelligence sharing is also an important topic to debate and progress before the event takes place. In many instances, the key to strengthening fraud prevention and detection in any market is the sharing of information and experiences, this approach is often described as. “It’s better to learn from someone else’s mistakes than to learn from your own”.
As with all major sporting events, the World Cup offers a fantastic opportunity for organisations operating in the host country. The challenge is to ensure that appropriate processes and systems are in place to respond to such a dramatic increase in the level of genuine tourists as well as organised criminal gangs being drawn to the event. With more information and understanding about the potential risks organisations still have time to implement effective protection and cash in on the positive aspects of hosting the World Cup tournament.
Johnathan Clover
Solutions Consultants
Decision Analytics
Experian
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