Financial Crime World

Integrating Risk Management Functions: Enhancing Effectiveness and Efficiency in Financial Crimes

The Current State of Risk Management

The current approach to risk management in financial crimes is fragmented, with separate functions operating in silos. This can lead to duplication of effort and resources, hindering the effectiveness and efficiency of risk management.

Benefits of a Unified Risk Management Model

A unified risk management model offers several benefits, including:

Strategic Prevention

  • Predicting risks rather than just reacting to them by redesigning customer and internal operations and processes based on a continuous assessment of actual cases of fraud, financial crime, and cyberthreats.
  • Redesigning customer and internal operations and processes based on a continuous assessment of actual cases of fraud, financial crime, and cyber threats.

Efficiencies of Scale and Processes

  • Integrating operational processes and continuously updating risk scores allow institutions to dynamically update their view on the riskiness of clients and transactions.
  • Institutions can dynamically update their view on the riskiness of clients and transactions by integrating operational processes and continuously updating risk scores.

Data, Automation, and Analytics

  • Integrating data from separate functions, both internal and external sources, enables enhanced customer identification and verification, and supports predictive analytics through artificial intelligence and machine learning.
  • Enhanced customer identification and verification can be achieved by integrating data from separate functions, both internal and external sources.

The Customer Experience and Digital Trust

  • An optimized customer experience can be achieved by segmenting fraud and security controls according to customer experience and needs, and using automation and digitization to enhance the customer journey.
  • Automation and digitization can be used to enhance the customer journey by segmenting fraud and security controls according to customer experience and needs.

Key Takeaways

Some key takeaways from this discussion include:

  • A unified risk management approach can bring together business, operations, security, and risk teams for efficient intelligence sharing and collaborative responses to threats.
  • Integrating operational processes and continuously updating risk scores allow institutions to dynamically update their view on the riskiness of clients and transactions.
  • A holistic approach to financial crime can enhance customer experience and digital trust by segmenting fraud and security controls according to customer experience and needs, and using automation and digitization to enhance the customer journey.
  • Banks should probe questions about processes and activities, people and organization, data and technology, and governance when designing their journeys toward a unified operating model for financial crime.