1. Continuous Transaction Monitoring
Detect and analyze anomalous transactions to address risk
control gaps, and improve internal and external compliance
Gianni Giacomelli
Senior Vice President, Genpact
Senthilvel K
Vice President, Genpact

2. A Global Business Process Services Leader: Process
Transformation and Outsourcing, Analytics, Technology
What
we do
How
we do it
We help leaders of some
of the largest enterprises
transform and run
their processes and
operations, including
the very complex and
industry-specific
Unbiased, agile combination
of process science, related
technology and analytics limits
upfront costs and enhances
future adaptability
Right critical mass:
•
we are large (64,000+ global
staff) but our solutions
appropriately flexible
•
our top management is
directly involved in our client
partnerships
Our
impact
We help enterprises to be
more competitive by
becoming more
intelligent: adaptive,
innovative, globally
effective and connected…
…by enabling tighter
management of costs,
risks, regulations,
and supporting growth
The results: US$22B* of impact for 800+ global clients
PROCESS • ANALYTICS • TECHNOLOGY
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2

3. THE CHALLENGE
PROCESS • ANALYTICS • TECHNOLOGY
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3

4. Huge transaction volumes, exception identification, sub optimal
post facto recovery, inconsistent practices are key issues
Barriers to
effective
controls
Vendor
management
Accounts
payable
Inventory
1. Huge transaction
Accounts
receivable
General
ledger
volumes and large
number of integrity
checks
2. Evaluating whether an
exception is genuine or
not is hard due to a large
number of „business as
usual‟ exceptions
3. Traditional post facto audit
has significant limitations
4. Organization, process and technology
Audit
analytics
Customer
management
Payroll
Causes
Excessive reliance
on external parties
due to lack of
internally trained staff
Business process
breakdowns more
frequently due to higher
complexity
Detection of errors from
audits is too late
CTM
Controls fail to keep
pace with the changing
landscape
drive varying levels of maturity in
compliance
PROCESS • ANALYTICS • TECHNOLOGY
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4

5. Inability to fix improper financial transactions in near-real
time leads to high organizational risk and financial leakages
Improper financial
transactions are a big
issue
• Hard to find and fix exhaustively and quickly improper financial
transactions in near-time, as well as to address respective inadequate
controls and faulty business processes
• These misses can lead to 12-17% leakage in P2P and 20-30% in O2C
Increased organizational vulnerability because of frauds, errors
Increased
organizational risk
• Increased business complexity increasing volume of transactions
Increased regulatory
requirements
• Greater compliance related obligations
Traditional measures
are inadequate
PROCESS • ANALYTICS • TECHNOLOGY
• Inconsistent enterprise IT and data management systems, multiple
transaction processing mechanisms in various ERPs
• Serious consequences for compliance failures e.g. FCPA
Traditional protections against insider fraud, such as segregation of
duties or employee authorizations, are no longer adequate
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5

6. Moreover traditional post facto recovery audit has also many
limitations
Limitation
Rationale
Takes too long
Many audits lag at least 18 months behind the transaction, by then companies
have missed out on cash flow and suppliers are asked to take a hit
Proving claim
validity is difficult
Lack of documentation coupled with inconsistent and sub-par claim
presentations can negatively impact vendor relationships and budgets
It is expensive
Audits are labor intensive and disruptive to ongoing business operations
Compliance
failures have
consequences
Sarbanes Oxley and other regulations mandate the need for better processes
and financial oversight
PROCESS • ANALYTICS • TECHNOLOGY
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6

7. THE SOLUTIONS
PROCESS • ANALYTICS • TECHNOLOGY
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7

8. Companies feel a combination of on-going monitoring, process
and technology can help solve their compliance challenges
Top 5 compliance related
challenges
1.
2.
3.
% agrees
Identifying and documenting
compliance related shortfalls
and exposures
64%
Allocating budget and
resources to compliance
60%
% agrees
74%
Changes to business
processes to improve
compliance
Top 5 mitigations
1.
Sustaining on-going
compliance
Technology changes required
for compliance
42%
Better audit procedures and
policies
61%
3.
Technology for monitoring
business processes impacted
by compliance
51%
Technology for managing
authorized access to
applications, information and
documents
43%
External experts in audit and
compliance
28%
4.
51%
5.
64%
2.
4.
On-going monitoring program
5.
Source: Aberdeen Group – Survey of 500 Controllers in US, Europe and Asia across multiple industry verticals
• Process diagnostics
PROCESS • ANALYTICS • TECHNOLOGY
• Process redesign
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8

9. An effective Continuous Transaction Monitoring (CTM) approach
A
B
Control
environment
setup
Platform
hosting and
data mining
• Understand
enterprise goals
and risks to
them
Extractor
• Assess controls
required and
monitoring
frequency
• Identify relevant
data
• Define, manage
and run CTM
CoE
• Acquires data
from relevant
data source
Mapper
• Maps data into
normalized
databases
• Continuously
updates data
warehouse
• Allows for reuse
of similar data
PROCESS • ANALYTICS • TECHNOLOGY
C
D
Transaction
analytics
Exception
management
Management
reporting
• Facilitated
definition of
complex
analytics
• Risk profiling of
exceptions
• Periodic
updates by
process,
analytics,
criticality, vendor
• Predictive
analytics (e.g.
fuzzy logic,
pattern
recognition,
statistical
analysis)
E
• Efficient
resolution and
follow up of
exception cases
• Looping and
closing of
exception cases
• Recommendations for
process
improvement
• Continuously
improving
algorithms
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9

10. A
Time effective set up of effective control environment after
appropriate risk assessment
What can be achieved
• Risk assessment and quantification, development of
mitigation control plan; control environment set up within 3-4
weeks
• Continuous assessment and improvement of implemented
controls
ILLUSTRATIVE
Sample deliverable
Controls, frequency and ownership
• Data cleansing to ensure optimal utilization of available
datasets
Delivery approach
Domain and CTM experts work in collaboration with the client to
• Assess the current control environment and the risks to the
organizational goals and objectives
• Build a complete control environment for the organization
• Determine the frequency for monitoring the controls
• Identify and capture the data which provide indicators of the
health of risk management and related controls
PROCESS • ANALYTICS • TECHNOLOGY
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11. B
Seamless platform hosting and improved data mining to ensure
comprehensive issue detection and analysis
What can be achieved
ILLUSTRATIVE
• Manual effort and errors reduced by 30-40% using automation
• Pre‐built extraction from major ERP like SAP, Oracle, JDE,
PeopleSoft, Amex, Lawson, etc. (used by ~75% of global
businesses)
• Increased availability of datasets for analysis through error and
completeness checks
Delivery approach
• Pre built data request templates by process/vendor/analysis/ERP
system type
• Custom scripts to rapidly extract data in an automated manner
• Dedicated experts with expertise in gathering data quickly and
ensuring accuracy and integrity of data prior to analysis
• Collaborative approach with client to ensure contextual
understanding of extracted data
PROCESS • ANALYTICS • TECHNOLOGY
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11

12. C
In depth and near time transaction analytics for early detection
of error patterns
ILLUSTRATIVE
Analytics example
What can be achieved
• Near real time identification of error patterns improves
turnaround time by 20% and recovery % between 3040% compared to post audit
• Granular and actionable insights by process and subprocess, IT system type, nature of transaction, etc.
Delivery approach
• List of analytics performed under each area – sub area
with detailed sub analytics by process/vendor/ ERP
system, etc.
• Heuristic algorithms which learn and improve
continuously
• Findings are presented graphically using user friendly
and configurable GUI
• Collaborative approach with client to ensure that the right
analytics are performed and corrective action taken
PROCESS • ANALYTICS • TECHNOLOGY
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12

13. D
Risk profiling of exceptions and follow up till closure
of genuine exceptions
ILLUSTRATIVE
Listing of exceptions
What can be achieved
• Exception reduction by 20-25% YoY
• Detailed listing of exception cases for proactive process
improvement
• Ideas and initiatives to eliminate exceptions
Delivery approach
• Risk profiling of exceptions based on type, criticality, etc.
• Collaborative approach with client to determine “genuine”
exceptions to reduce handling time of false exceptions
• Integrated exceptions in instances where exceptions are linked
to each other
• Follow up of genuine exceptions and recommendations on
process, technology fixes, etc. to eliminate them
PROCESS • ANALYTICS • TECHNOLOGY
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13

14. E
Frequent and granular management reporting
ILLUSTRATIVE
What can be achieved
• In depth reports at an agreed frequency
Example report
• Comprehensive view of all relevant exceptions that
cause fraud, errors, compliance failures etc.
Delivery approach
• Granular reporting of exceptions based on process
type, ERP system, vendor etc.
• Assessing the root cause of the exception and
validating the same with the business/process owner
• Detailing of initiatives (e.g. process changes,
technology improvements, etc.) to eliminate
exceptions
• User friendly dashboards with slicing and dicing
capability
PROCESS • ANALYTICS • TECHNOLOGY
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14

15. Significant improvement potential in operating and process metrics
through CTM
Business process
Top 3 leakage points
% transaction
value at stake
% prevented
through CTM
Procure-to-pay
• Data errors and omission
• Unauthorized payments
• Overpayment
12-17%
~90%
Order-to-cash
• Delayed collections
• Unauthorized changes in masters
• Invoice and billing mismatch
20-30%
~97%
Travel & living
• Policy non-compliance
• Overpayment
• Unauthorized payments
7-12%
~85%
General ledger
• SoD conflict
• Whole number entries - rounding off
• Unusual account pairing analysis
11-17%
~97%
FCPA
P-Card
• Out of country payments
• Gift /sponsorships/government
payment analysis
• Unusual payments
• Purchases from approved/ regular
vendors
• Policy non compliance
• Improper/illegal payments
PROCESS • ANALYTICS • TECHNOLOGY
6-7%
~80%
10-15%
~80%
Operating metric
• Decrease in working
capital by up to 35%
• Increase in cash
flow by 2-3%
• Bottom line
improvement by up
to 0.1-0.2% of
revenues
• Improve revenues
up to 1%
• DSO reduction by
10-15%
Process metric
• 10-15% savings
from employee
recoveries
• Prevention of
accounts misreporting
• Prevention of foreign
corrupt practices by
up to 80%, reducing
probability of
penalties
© 2014 Copyright Genpact. All Rights Reserved.
15

16. CONTACT GENPACT TO EXPLORE THE
“ART OF THE POSSIBLE”
PROCESS • ANALYTICS • TECHNOLOGY
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16

17. About Genpact
Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and
operations, including those that are complex and industry-specific. Our mission is to help clients become
more competitive by making their enterprises more intelligent through becoming more adaptive,
innovative, globally effective and connected to their own clients.
Genpact stands for Generating Impact – visible in tighter cost management as well as better management
of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune
Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes,
crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and
technology, which limits upfront investments and enhances future adaptability.
We have global critical mass – 62,000+ employees in 24 countries with key management and corporate
offices in New York City – while remaining flexible and collaborative, and a management team that drives
client partnerships personally.
Our history is unique – behind our single-minded passion for process and operational excellence is the
Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for
more than 15 years.
For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.
PROCESS • ANALYTICS • TECHNOLOGY
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17

18. Thank You
Gianni.giacomelli[at]genpact.com
Senthilvel.K[at]axisindia.co.in
www.genpact.com/home/solutions/risk-management-services/continuoustransaction-monitoring