Earlier this week, we organized a conversation with Angie Dobbs (VP, Customer Channels & Risk at Wave) and Sid Pershad (Head of Global Seller Risk & Counterfeit Intelligence at eBay) to discuss best practices for merchant risk management in the current macro-environment. If you missed the webinar, we’ve included a brief summary and access to the recording below. 

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Emerging risk trends in the current environment

According to Sid, the current macro-environment combined with advances in AI creates a more complicated risk management landscape, where the lines between traditional fraud risk and credit risk are constantly blurred. 

On the one hand, the economic uncertainty may influence customers to behave differently - Angie calls this “good merchants gone bad”. For example, an SMB customer with a great credit history and track record on a software platform might suddenly renege on their product delivery obligations (due to operational issues or other factors). This is not a traditional bankruptcy or insolvency case, and can be difficult for traditional risk models to predict as they rely on internal data points. According to Angie, external data sources like negative 3rd party consumer reviews can be helpful risk signals in these cases. Coris makes it easy to ingest 3rd party review data from Google, Yelp, Facebook, and other platforms through its MerchantProfiler capabilities.

On the other hand, advancements in generative AI have allowed suspicious actors to create even more compelling fake identities. Now, fraudulent actors can use AI to not only social engineer and mimic a merchant’s digital identity, but they can also leverage AI to mimic legitimacy with the front office (e.g. when calling customer support). These risks require new, creative mitigation strategies and tools. 

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Risk as a collaborator, not a gatekeeper

As companies push faster towards profitability, risk teams are under pressure to think more holistically about the impact their strategies will have on their SMB customers and the business. In these times, businesses are not necessarily optimizing for the lowest losses; they need to balance loss considerations with the impact that risk strategies will have on customer experience, time to market, churn, and retention.

According to Angie, it’s critical for risk teams to build strong partnerships with product, engineering, and marketing upfront. They should communicate that the risk team is not a gatekeeper, and is aligned on fueling responsible growth for the business. When risk leaders position themselves in this collaborative way, they are often brought into business conversations earlier, and can more efficiently weigh in on the controls and timelines for new product launches.

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Education as a risk management lever

Since Wave and eBay are horizontal platforms serving many types of small businesses, they rely on strong customer segmentation and a “jack of all trades” toolkit to serve multiple risk profiles. Customer education functions as an important part of this multi-segmented risk management approach. 

For example: many SMB customers using Wave might be first-time entrepreneurs, and many eBay sellers might be everyday consumers. These individuals may not be well-versed in accepting credit card payments, so they might not understand common financial concepts such as chargebacks or disputes. Risk teams need to really understand these customer profiles and provide relevant, point-in-time resources to educate merchants so that they can understand adverse situations and possible solutions. While this education can require significant investment upfront, it generates strong understanding and trust between merchants and the business, and can help mitigate losses and confusion later on in the SMB lifecycle.

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Watch the on demand webinar

Our panelists made it clear that, in the current environment, best-in-class risk teams are going beyond loss mitigation and working collaboratively to enable revenue growth. Listen to the full webinar below to hear more of their advice and best practices for risk practitioners. 

If you’d like to learn more about Coris, contact us.