Managing Risk in eCommerce

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Managing Risk in e-Commerce

• Bucharest October 2000

Ted Lewry - DB Europe
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Topics

• The e-Commerce Opportunity
• Obstacles to the Adoption of e-Commerce
• Overcoming the Obstacles
• Imperatives for Transition Economies

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Projected U.S. B2B e-Commerce Revenue the
Opportunity
2.7 Trillion
BILLIONS
1.1 Trillion
400 Billion
Source Forrester Research, Inc., 02/00
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E-commerce Conducted through Multi-Sellers in
2003
Will facilitate over 400 Billion worth of B2B
goods and services
Energy
Chemicals
100
90
80
Food and Agriculture
Computing and Electronics
70
60
Non-Production (MRO)
50
Motor Vehicles
40
Shipping and Warehousing
Construction
Pharmaceutical and Medical
Business Travel
30
Administration/Support
Professional
Consumer Goods
20
Telecom
10
0
Source Bear Stearns, 12/99
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Obstacles to the Adoption of e-Commerce

• Authentication of buyers and sellers
• Privacy and protection of information
• Fraud and misrepresentation
• Reliability of trading partnersThese obstacles
  are heightened in a B2B trading environment by
  the involvement of both
• Business entities
• Individuals within the business entities

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Managing e-Commerce Risks

• How do we know that the buyer or seller on the
  other side of the Web is
• Who they claim to be?
• Authorised to represent the business in the
  capacity they claim?
• How do we know that the buying or selling
  business is
• Who they claim to be?
• Authorised to distribute the brand you know?
• Creditworthy?

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Managing e-Commerce Risks

• Need to authenticate the credentials of the
  signers of electronic contracts
• Verify the identity of the other party - and
  their authority
• Be confident that the integrity of the electronic
  contract has not been comprised
• Be sure that the other party cannot repudiate the
  transaction
• Qualify that the other party will deliver/pay for
  the goods or service

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Identity Instruments

• User ID Passwords
• Involve pre-registration
• Liable to misuse
• Corporate Credit or Purchase Card
• Satisfy the need for individual and enterprise
  authentication qualification
• Likely to only be used within certain transaction
  size parameters
• Unlikely to displace open lines of credit

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Identity Instruments

• Digital Certificates
• Software files that reside in your Internet
  browser and e-mail software
• Contain information that uniquely identifies you
  and your organisation
• Data is encrypted to prevent tampering and ensure
  confidentiality
• Smart Cards
• A tamper-proof chip-based card that contains both
  identification details and payment instruments.
• Can contain Digital Certificates that can be
  revoked in the event of loss, theft or misuse

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Benefits of Digital Certificates

• Provide security through -
• Authentication ...of identity
• Integrity ...has not been altered
• Non-Repudiation ...inability to deny
• Confidentiality ...tamper-proof

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Digital Certificate Landscape

• Modest adoption to date
• 9 million digital certificates were issued 1997
  thro 1999 in N America and 25 million globally.
• Moderate growth over next three years
• Projected issuance over the next three years is
  115 million in N. America and 204 million
  globally
• Global Market Leaders (1999)
• Server Certificates Client Certificates
  Verisign, 81 Market Share - Leader Entrust
• Entrust, 12
• Thawte, 7 (now owned by VeriSign)

Source Giga Research, 08/31/99
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eccelerate.com

• A company of the Dun Bradstreet Corporation
  formed in 1999
• Created to
• Form strategic alliances with Digital Certificate
  issuers
• Provide trusted and precise business credentials
  inside electronic commerce transactions
• Drive new product innovation

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Digital Certificates. . . How eccelerate.com
Adds Value
Step 2 Authentication Verification
Step 1 Registration
Step 3 Issue DUNS Embedded Certificate
Authenticate Company
Verify Employment
eccelerate.com
Certificate Enrollment
Name John Smith
Co. Name ABC Inc.
Address 123 Main Ave.
City New York
State NY
ZIP 10012

• E-mail to applicant with URL link to retrieve
  approved digital certificate

Phone [phone]

• Verification
• Telephone
• confirmation to
• verify applicants
• employment
• Verify applicant as
• an authorized
• company
• representative

• Authentication
• Business entity
• match against
• DBs global
• database
• Map to DB
• D-U-N-S number

APPLY

• Registration
• Annual customer application

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Qualifying Trading Partners
Enabling Real-Time, Smart Decisions _at_ the time of
transaction
Seller
Buyer
Transparent Marketplace Login
eccelerate Certificate Validation
Extract DUNS from Certificate
Retrieve DB Data
Execute Customized Decision Rule
Decisions!
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Imperatives for Transition Economies

• In order to compete and participate in the B2B
  e-commerce world it is vital to
• Ensure efficient communications networks and
  Internet infrastructures are in place
• Make information on businesses transparent, to
  enable authentication credit verification
  vendors to operate
• Facilitate growth of open account transactions
  through de-regulation of banking and customs
  practices

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Its Happening..
By 2003, Deloitte projects B2B sales will be six
times as large as the business to consumer
market.
IDC anticipates that small businesses will play a
substantial role in online trade, representing 30
percent of worldwide commerce by 2003.
Within the next two years, more than 90 of
companies that sell goods to other companies will
be transacting business on the Web - Forrester.
..will you be ready?