Transforming Risk Operating Models in Financial Crimes, Fraud, and Cybersecurity
Integrated Approach to Fraud Risk Management
A unified approach to fraud risk management can result in an optimized customer experience. By integrating business, operations, security, and risk teams for efficient intelligence sharing and collaborative responses to threats, financial institutions can create a more robust and effective risk operating model.
Customer Experience and Digital Trust
Meaningful improvements in customer satisfaction help shape customer behavior and enhance business outcomes. A holistic view of the evolving landscape of financial crime enables institutions to better understand their customers’ needs and provide them with a seamless experience.
Holistic View of Financial Crime
The objective of the transformed operating model is a holistic view of the evolving landscape of financial crime, incorporating processes and activities, people and organization, data, tools, and technologies, as well as governance.
Key Considerations for Designing a Target Risk Operating Model
When designing their target risk operating model for financial crimes, fraud, and cybersecurity, banks should consider the following key questions:
Processes and Activities
- Customer Identification and Authentication: What are the key processes or activities to be conducted for customer identification and authentication?
- Monitoring and Detection of Anomalies: How frequently should specific activities be conducted (such as reporting)?
- Responding to Risks or Issues: What activities can be consolidated into a “center of excellence”?
People and Organization
- Relevant Stakeholders: Who are the relevant stakeholders in each line of defense?
- Skills and Resource Allocation: What skills and how many people are needed to support the activities?
- Shared Activities: What shared activities should be housed together (for example, in centers of excellence)?
Data, Tools, and Technologies
- Data Sharing Across Divisions: What data should be shared across cybersecurity, fraud, and other financial-crime divisions?
- Consistency and Streamlining of Data Activities: Can the data sit in the same data warehouses to ensure consistency and streamlining of data activities?
Governance
- Governance Bodies for Each Risk Type: What are the governance bodies for each risk type? How do they overlap?
- Responsibilities of First and Second Lines of Defense: What are the specific, separate responsibilities of the first and second lines of defense?
By addressing these questions, financial institutions can design a unified operating model that incorporates processes and activities, people and organization, data and technology, and governance. This will enable them to better detect and prevent financial crimes, improve customer experience, and enhance digital trust.