Risk Intelligence Editor
The latest webinar in our "Meet the Experts" series takes a deep dive into the importance of implementing a holistic compliance programme – and offers some best-practice insights for a more proactive approach to your risk management strategy.
Do more with less
Regulated entities today face a perfect storm of evolving regulations, surging due diligence volumes and costs, and finite resources. LSEG research reveals that 90% of respondents say the volume of enhanced due diligence (EDD) requests they deal with has risen over the last 3 years.
These rising volumes add substantial pressure to budgets and resources – and at the same time compliance teams must ensure that customer onboarding and transaction decisions are quick, seamless and cost-effective.
All this translates into an urgent need to “do more with less”. But with the right data and technology, you can manage this complex risk landscape.
5 best-practice insights
- Adopt a risk-based approach
Adopting a risk-based approach is essential, because resources are finite. Even the largest organisations do not have unlimited resources – and this means that you should spend your available budget, time and effort on the areas of greatest potential risk.
Screening is an important initial step that can help flag potential risk. Where risk is suspected or detected, further due diligence in the form of enhanced due diligence (EDD) is needed.
EDD should be proportionate to the level of risk suspected and should deliver actionable insights, including additional details relating to:
Ultimate beneficial ownership (UBO) in the case of entities
Source of wealth (SoW) in the case of individuals
Politically exposed persons (PEPs)
- Ensure access to trusted, accurate data
Trusted, accurate data is a core ingredient for a successful risk-based approach.
Screening and EDD both rely on data that is complete, up to date and granular in nature. Before beginning any transformation of your existing risk processes, our experts recommend assessing your data and taking the necessary steps to ensure that it is of the highest quality.
- Use technology – safely
Technology, including AI and machine learning, is fast becoming an essential tool when it comes to keeping pace with rising volumes of due diligence data.
Technology must, however, be used wisely – and this means human oversight. The right technology can help and enhance your due diligence by automating the slow, manual aspects of risk management, such as identifying false positives and completing low risk verifications. This frees up valuable time for risk professionals to focus on higher risk areas.
It is also worth noting that the incremental use of technology can be highly beneficial. You do not need to overhaul every aspect of your processes immediately but rather identify your most urgent pain points and implement the right technology to address these.
- Implement a centralised system
A holistic approach to risk management can only work if you break down silos and move towards a centralised system, where you collect all your customer data in one place.
This immediately mitigates the risk of damaging client relationships by, for example, re-requesting information that you already have. Onboarding must be smooth and seamless and, as much as possible, data should be collected once only.
- Build a defensible compliance programme
You always need to be able to stand by your risk decisions, and this means that your risk management processes must be defensible and be able to withstand the scrutiny of an audit.
An end-to-end approach that connects all the aspects of your risk management can help with this.
The key take away is this: risk is multi-dimensional in nature and needs to be assessed holistically, with the ultimate goal of identifying high risk situations as quickly as possible. This will allow you to make appropriate, defensible risk-based decisions that support your business and protect valuable client relationships.
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