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Gold AHA Award in Enterprise Risk Management

PAYCHEX INC.

By Staff Writer | Updated on November 06, 2007

About four years ago, Paychex, the world’s leading provider of outsourced payroll services to companies, realized it was vulnerable to significant operational risk. In the Paychex world, where more than 561,000 U.S. companies rely on the vendor to manage payroll and related employee benefits transactions and records, operating risk is when the payroll process and supporting services experience interruptions in the intended cycle. Since its operations were contingent on human beings entering appropriate payroll and tax information, the possibility of failed transactions was high.

Moreover, as this data was transmitted from one to another of Paychex’ two dozen product systems, such as direct deposit, 401(k) record keeping and Taxpay tax processing services, additional operational risks were introduced. Individuals working in these product areas corrected the original incomplete and/or improper data, creating disjointed reams of information. The consequences for Paychex ranged from miffed clients potentially taking their business elsewhere to expensive tax penalties levied by authorities.

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