‘You’re Out of Order!’ Reducing NIGO Process Risks w/ Digital Signatures

 If you’ve been keeping up with our Digital Signature ROI blog series, you’ll know that we’ve been covering all of the various ways in which implementing digital signatures can benefit your organization. In the next few posts, we’ll be taking a look at risk. Risk management is a critical element of every major business, and you may be surprised to know that electronic signatures can play a significant role in reducing the weight of risk on your organization’s shoulders.

For the purposes of our blog, we’ll be defining risk in three ways, and for each, we’ll explain how a digital signature solution can reduce or eliminate it:

1. Process / NIGO Risk,
2. Market / Technology Risk, and
3. Legal / Regulatory Risk

Let’s take on Process/NIGO Risk first, and tackle the others in successive entries.

Process / NIGO (not-in-good-order) risk can be defined as the risk of a transaction, order, or process not reaching completion due to the lack of a required data field or a process task that was incorrectly acted upon. We’ve already explained how paper documents and wet ink signatures cause time delays of days to weeks, how they impose substantial costs on companies, and how they put a drag on efficiency and revenue. Yet another hidden cost of sticking with paper? The costs and time involved with reading through documents being sure that they have been completed properly so that an insurance policy, for example, can be initiated.

Tower Group reported that upwards of 40% of all annuity transactions actually qualify as NIGO; that is, almost half of all paper forms submitted for insurance applications are in fact incorrect, causing interruptions in customer plans, frustration with policyholders and support staff, and additional time and resources spent on a transaction that should have been finished the first time out. With NIGO processes, documents need to be re-delivered, filled out again, re-signed, and entered once again into the validation process. And what if the form this time is missing different information or missing a signature or initial? Chaos!

If it’s already costing the company a set amount of time and money to produce, deliver, process, and validate the documents, imagine how much that gets multiplied for each mistake or omission. How much? In total, Tower Group suggested that paper processes cost 14 times more than doing them in an automated electronic fashion.

So NIGO processes and documents represent a disturbing portion of the total document volume. But this also means that companies are engaged in a struggle to keep this number down by employing cadres of employees who must review paper forms to be sure each check box is ticked, each signature is in the right place, and all IS in order. 

Most of these paper forms likely started electronic: a user may have filled them out on her PC, but then printed them in order to sign with a pen. The resulting documents then may have to be scanned, or even worse, the data may need to be re-keyed into the company’s backend systems, presenting even more opportunities for errors. An AIIM survey found that 45% of documents that are scanned in had started as a completely ‘digital’ document.

The rise of straight-through processing (STP) was designed to minimize these problems, but one thing was lacking: electronic signatures. By adding digital signatures to the process, companies can keep the entire workflow electronic, eliminating the need for customers to print documents just to sign them, and in turn the companies’ scanning or re-keying data.  Moreover, by using an electronic signature solution, companies can ensure that customers use the correct forms and that users initial and sign in all the appropriate places. Business rules can then enforce that applicants cannot in fact leave the approval step without acknowledging they have read particular documents in an information packet.

We’ll speak about how digital signatures can reduce other risks to today’s enterprises in the next few posts.