Dell_20181213

Niladri Dutta
Director
Deloitte India

Risk Management An Enabler For Digital Telco CXO Decision-Making

In the modern era, the global telecom industry is in a state of flux for quite a while now. Most of the telecom companies (telcos) are banking on riding the high tide with the launch of 5G, and thus making up for the losses that they have incurred earlier. Internet of things (IoT) will become the most commoditized service once every operator rolls out 5G across the world; operators of tomorrow will soon be transformed into service enablers.

With digital transformation being the new buzzword, and the interest for most C-level executives in terms of the new-tech investments, it is imperative to know how they perceive some critical functions within the organization – one such function would be risk management and how the telcos perceive this in the near future.

Risk traditionally has been seen as a must-have compliance function and necessary for a sustained business. However, with the launch of newer business models and revenue streams (mostly driven by digital technologies), this perception would see a gross change in the next-gen organizational set-up.

Telcos that are forward thinking and fast evolving need to look at risk management in a completely different light – more as an enabler of business rather than a show stopper. C-level executives need to have a strong focus to see how risk management can have an impact on either cost optimization or revenue maximization.

This is where the concept of three different life cycles come into play in the telecom world – the customer life cycle, the product life cycle, and the revenue life cycle (operational life cycle). These life cycles form the entire order to cash chain. Other industries should look at the telecom sector as a benchmark to embrace and integrate this change.

In each life cycle, risk management should correlate effectively as an enabler to understand key decision points for the C-level stakeholder under consideration, whether it is the CIO, CISO, or the chief digital officer, or even sometimes the CTO in a telecom context. Each life cycle mentioned earlier must have unique risk indicators, which need to be defined and captured in a key risk indicator (KRI) matrix. It is essential to understand that these KRIs are aligned to individual business processes, which underlay within each of these life cycles.

A simple reference point can also be the telecom process framework governed by enhanced telecom operations map (eTOM). Critical processes must have an appropriate KRI well captured and drafted for the risk-management function from a standpoint where risk can be an enabler to business (not from a compliance standpoint). The next aim would be to understand the telco CEO balanced scorecard matrix, which is driven by either ARPU, total revenue, or cost followed by growth and churn, mapped to each departmental owner’s individual metrics (which is either revenue or cost driven).

The aim would be to critically identify these key performance indicators (KPIs) within the balanced score card, and map it to key quality indicators (KQIs) from a business-process standpoint. This would operationally realize the core activities envisioned at the C-level to manage and sustain the business.

However, for risk management, the buck does not stop here. One should reimagine a new way of correlating these KPIs and KQIs with the individual KRIs as defined in the 3–4 critical process life cycles. These act as drivers of the risk-management function.

Risk management needs to be perceived as a business-transformation function. It is a must-have entity that lays the foundation of a strong sustained business need for telcos, where every KPI is eventually mapped to a KQI, which in turn is mapped to a KRI impacting telcos’ revenue or cost. Thus, risk management will help C-level executives take decisions related to investing in technology or new-age business to generate money or drive efficiency through automation.

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