Risk Management 2019-12-05T21:13:35+00:00

NewGen ISS – Remittance Holding Capacity and Risk Management

The Remittance Holding Capacity is a key part of the NewGen ISS risk management framework.

Designed to create a more secure financial environment, the Remittance Holding Capacity introduces a monetary threshold for agents’ outstanding BSP Cash sales.

To promote safer selling, NewGen ISS introduces a Remittance Holding Capacity (RHC) for all agents with access to a Cash facility in the Billing Settlement Plan (BSP). The RHC sets a maximum threshold for agents’ outstanding Cash sales pending remittance via the BSP.

The implementation of the RHC is a key feature of NewGen ISS and part of a broader update of the risk management framework.  This framework reflects the introduction of the new accreditation models, GoLite, GoStandard and GoGlobal, where an agent’s choice of accreditation model determines the applicable risk management.

Learn more about IATA’s accreditation options.

Risk Management Framework

For agents with access to a Cash facility under the GoStandard and GoGlobal accreditation models, one of three risk statuses is assigned (A, B or C). This risk status is determined by the agents’ ongoing risk history assessment (historical behaviour in the BSP) and the outcome of their financial assessment. For GoGlobal agents, the financial review is quarterly, in accordance with the multi-country assessment framework. For GoStandard agents, the financial assessment is annual in accordance with the applicable local financial criteria of the market.

Learn more about the Risk History Assessment and Risk Events here

Each risk status carries different conditions related to financial security requirements, applicable remittance frequency and the calculation of an agent’s Remittance Holding Capacity.

How is the Risk Status assigned?

One of three statuses is assigned per the following table:

Financial Review Result Risk History Assessment Risk Status Assigned
Pass Pass A
Pass Fail B
Fail Pass
Fail Fail C

What are the conditions associated to each Risk Status?

Depending on an Agent’s Risk Status, different Cash Conditions will apply as shown below:


  1. RHC = Calculation
  2. Financial Security only if required per LFC for Standard Agents with Cash Facility
  3. Standard Remittance frequency of the BSP

  1. RHC = Calculation
  2. Financial Security required
  3. Standard Remittance frequency of the BSP

  1. RHC = Financial security provided
  2. Financial security required
  3. Most frequent remittance frequency in the BSP*

*Applicable for BSPs with multiple remittance frequencies

What is the RHC?

In addition to the assignment of a risk status, all GoStandard and GoGlobal agents are granted an individualized RHC. The RHC is the maximum amount of monies at risk that an agent may have outstanding to the BSP at any time. IATA continuously monitors, in real-time, agents’ sales, and if ever an agent reaches the RHC granted, Cash as a form of payment is restricted. The agent is nonetheless able to continue transacting using other available payment methods. Once a remittance is received and the agent’s outstanding amounts fall below the RHC threshold, Cash as a form of payment is restored.

How is the RHC calculated?

The RHC calculation is designed to promote safer selling while ensuring that the majority of agents do not reach their maximum threshold.

Risk
Status
Remittance Holding Capacity Calculation
A Total Days X Daily Average BSP Cash Turnover (3 Highest Reporting periods) x2
B
C Remittance Holding Capacity = Financial Security Amount Provided

Total Days = Number of days in Reporting period plus number of days in Remittance period.
Daily Average BSP Cash Turnover (3 Highest Reporting periods) = Agent’s Average daily BSP cash
turnover for the 3 highest Reporting periods of the previous 12 months.
x2 (or +100%) represents the year-over-year growth threshold.

Note, the local financial criteria in some markets establishes what percentage of the RHC must be covered by a financial security, for Risk Status A and B agents.

An agent’s RHC will be reviewed at minimum once per year and is reassessed with any change to an agent’s risk status or applicable cash conditions. Agents may also request an ad hoc recalculation of their RHC considering sales from the previous 12 months.

How can Agents monitor and manage their RHC?

Agents are notified by email when they reach 50%, 75%, 100% of the determined RHC, and agents are able to monitor their RHC usage directly through the IATA Customer Portal, under a dedicated service called the “Risk Profile and RHC.” Agents’ designated Customer Portal Administrators define which agency users  receive the RHC email notifications and can access this service.

In case the RHC threshold is reached, agents have the ability to continue issuing tickets in the BSP using IATA EasyPay, a new, voluntary pay-as-you-go e-wallet solution, or customer cards. However, Cash as a form of payment, will be restricted, until a remittance is received and the total outstanding Cash amounts fall below the RHC threshold.

Learn more about IATA EasyPay

To manage their RHC, agents are also able to make full or partial advanced remittances to the BSP at any time to lower their amounts outstanding.

Agents are further able to adjust their RHC by amending the amount of financial security provided to IATA. One type of financial security option available to agents is Global Default Insurance (GDI), which can be easily adjusted to facilitate changes in an agent’s RHC.

Learn more about Global Default Insurance

These measures are intended to provide agents with the necessary tools to manage their RHC. Agents should define a strategy for managing their RHC, considering for example:

  1. Who within the agency will be monitoring the RHC?
  2. Is the Agency expecting a sales peak, large group, new account or other which may affect its RHC usage?
  3. At which level of RHC usage will the agency take action? (e.g. 75% of the RHC)
  4. Which action is most appropriate? Switching to another form of payment? An advanced remittance?

Managing your RHC – An Infographic

What is the Risk Management Framework for GoLite?

As GoLite agents do not have access to a cash facility within the BSP, no Risk Status or RHC is applicable. No minimum financial security is required for GoLite-accredited agents. However,  GoLite agents’ ADM levels in the BSP will be monitored and a financial security may be requested if ADM levels exceed a defined threshold (equivalent of USD 5,000 in a quarter).