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Can the Cash Processing and Transport System Become a High Reliability Organization?

byLowers & Associates | September 13, 2017

 

A High Reliability Organization (HRO) is one that achieves desired outcomes consistently, despite operating in a highly complex environment characterized by high risks. It learns from its failures, even those unanticipated, and uses them to improve over time.

Could the Cash Processing and Transport System (CPTS) operate like an HRO? Let’s begin by determining if CPTS shares the characteristics of an HRO.

A Complex Environment

Modern economies, like America’s, do depend on the critically important role of cash and cash management to fulfill or tender transactions, and that means reliable CPTS is essential. Cash is moved from the Federal Reserve System to consumers through a bewildering array of intermediaries including: member banks, CIT operators, bank vaults, virtual vaults, ATMs, commercial businesses, payday loan operations, check cashers, casinos, and a myriad of others. The role of cash is changing in this digital age, but as study after study has shown, it is still fair to say that it is the lifeblood circulating within our economy.

A High Degree of Risk

Cash by its very nature is high value, easily traded, and can be packaged in small sizes with huge amounts. Its ease of use and tender is what makes it so efficient and useful. This same characteristic is also what makes it prone to failures during processing, transport, and storage. The high value is further compounded by the complexity of the very circulation system in which it transacts. A multitude of handoffs and transaction points through a variety of processing and operations to secure storage makes tracking, protecting, and accounting for cash very difficult. As a result, there are many ways to experience loss, said another way, “many ways to fail.”

Many Ways to Fail

Potential failures in the system include:

  • Planned external criminal activity including theft, robberies, extortion, and fraud
  • Opportunistic criminal activity
  • Employee theft or fraud
  • Poor procedural controls that create losses
  • Regulatory violations of AML reporting rules
  • Personal injury and loss of life

Although statistics demonstrate that CPTS is relatively safe per the opportunities for failure to occur, according to Lowers & Associates statistics and the FBI statistics, failures do occur regularly. When they occur, the consequences can be severe.

Unexpected Risks

Even though CPTS operators work diligently to identify and mitigate risks, there is a real and significant probability that they will face unexpected threats. Unexpected because of the intentional human actions of the perpetrators that work diligently to conceal their activity to avoid detection. When high values of currency are involved, the enterprising criminals can be extremely clever.

It is clear that the CPTS would benefit from behaving like a High Reliability Organization, since the returns could be substantial when one considers the avoided failures, improved efficiency and greater reliability gained.

To achieve HRO status, CPTS managers need to determine what outcomes they wish to improve, and make those the mission of the organization. They need to adopt the training, processes, improvement analysis, and ultimately the decentralized responsibility for operations that HROs espouse.

One challenge CPTS faces, as an industry, is that operating like an HRO would require extensive cooperation among separate operating entities and various businesses. Common standards and measured goals would be necessary, and every interconnected activity would require that all constituencies have a responsibility to observe and respond to the activity of each to avoid failure. When failure does occur then a detailed analysis of the cause would ensue to ensure those failures are not repeated. In this way, all operating units and businesses could benefit from acting like an HRO through improved performance reliability.

If we look at the healthcare industry as an example, creating the culture that supports HRO in action does take significant investment, but the result is an overall organization that learns and adapts over time in the face of significant change, providing for a significant return on investment.

 

 

ABOUT THE AUTHOR

Lowers & Associates

Lowers & Associates provides comprehensive enterprise risk management solutions to organizations operating in high-risk, highly-regulated environments and organizations that value risk mitigation.

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