Risk Management: Formula for a Successful Gambling Business

Risk management is an important part of enterprise strategy, regardless of the type of activity. And in the case of a casino, the owner of the project has to face not only administrative and financial risks but also fraud on the part of customers. So the issue of protection against threats becomes even more relevant.

The Concept of Risk Management

Risk control in a casino is a system for running internal business procedures aimed at reducing negative consequences in the course of an enterprise's operation.

Risk supervision tools are designed to perform the following tasks:

• processing and analysis of events with a potentially high level of risk;
• visitor activity control;
• control and evaluation of the results of gaming runs and the reaction of players;
• analysis of the effectiveness and efficiency of existing game algorithms;
• automatic response to risky events following the specified parameters.

Types of Risks in iGaming

Business risk falls into two main groups:

1. External. Problem situations that are beyond the control of the casino administration (for example, a change in audience preferences, a drop in consumer demand, termination of the contract by the supplier, etc.).
2. Internal. Negative consequences for the business as a result of the actions of the management or staff of the establishment (for example, accounting errors, misuse of customer data, violation of the company's internal policy, technical failures in the system, etc.).

Additionally, in the gambling industry, it is worth highlighting the following types of risks:

1. Reputational. This is an opportunity to damage the name and image of the gaming brand. Among the risk factors, there are negative feedback from customers and partners of the institution, and bad media coverage.
2. Financial. The risk of large money losses that are not associated with the standard payouts of casino winnings. These can be penalties from suppliers and licensors, large financial losses in connection with the transfer of the site to another platform, the closure of the enterprise, etc.
3. Regulatory. The possibility of being blacklisted by providers or licensors, administrative and financial fines due to violation of industry standards, and refusal to obtain a gambling licence.
4. Network. The risk of leakage of commercial, user and financial information, violation of network security protocols as a result of the actions of staff members, customers or a third party.
5. Responsible gaming. Problematic situations in case of violation of the rules of secure gambling, non-compliance with established legal norms and policies to combat terrorism and money laundering.

Stages of Organising Risk Control

To conduct a risk assessment, a single scheme is used that is relevant for commercial start-ups of any format.

Ways to Influence Risk Factors

The starting point for implementing risk control that has positive results is to create a list of possible negative factors and an action plan to manage them.

The main ways to control risk situations and factors are:

Adoption

The negative factor is registered in the risk management software, but no actions are currently being taken.

The acceptance strategy works well with the evaluation and control of known risks. For example, the operator will sooner or later have to pay the user a large jackpot. But it makes no sense to take any preventive measures because the reserve capital was prepared at the stage of formation and registration of the company. No other actions are required.

Prevention

Potentially dangerous situations can be avoided by radically changing the structure of the business or entirely abandoning some areas of growth.

For instance, in the regulatory jurisdiction, new parameters for the supervision of gambling establishments have been adopted and an increase in the tax rate is planned. The operator can either accept a new policy or terminate relations with the licensor by obtaining permission from another authority.

Transfer

This is a business program in which the damage to the enterprise is completely borne by other project participants.

In the field of iGaming, two examples of such a system can be distinguished:

1. Franchise work. By joining the franchisor's network, the administrator receives a ready-made casino at their disposal, but all the risks associated with the operation of the industry remain the responsibility of the seller. The supplier company takes care of legal and organisational issues and guarantees protection against financial risks if it is necessary to pay large sums of money to players.
2. Working with affiliate networks. Some affiliate programs charge webmasters compensation for frequently winning clients. The amounts of prizes for attracted users are deducted from the accounts of affiliates. This is how the casino protects itself from too-lucky gamblers and delegates financial risks to the partner.

Mitigation

One of the most common supervision techniques involves several preventive measures to minimise the possible consequences of doing business.

Available tools and actions:

• early connection and configuration of security programs;
• regular internal and external independent audits to identify control problems and other possible risk factors;
• continuous professional development of staff members, etc.

The Main Things about Risk Management for Online Casinos

Risk management programs are very different from any control business strategy.

• With the help of such programs for casinos, you can control external and internal threats: behavioural reactions of customers, technical characteristics of the system, the level of quality of work of full-time employees, etc.
• The company may face a variety of threats, ranging from negative media coverage to global market changes that do not depend on the actions of the operator. Risk forecasting systems allow you to develop an optimal work strategy.
• Potential threat management systems are selected individually for each business type. It can be either a complete change in the project control policy or advance preparation for possible threats and the transfer of responsibility to partner companies.

Our team offers:

• security systems;
• multicurrency payment modules;
• turnkey casinos;
• partnership programs;
• remote business administration services;
• gambling licences of respected regulators.

To receive advice and apply for iGaming products and services, please contact us.