Build a Risk Assessment Process

This post follows our previous discussions on and . Here, let's explore how to created risk assessment processes, tailored to various use cases, such as client renewal, enhanced due diligence, entering new jurisdictions, or simply assessing individual or corporate risks.

A risk assessment is a systematic process used for identifying and evaluating their client risks that could negatively impact an organization's operations, financial performance, or reputation. It involves identifying risks, evaluating impact and likelihood and creating mitigating strategies.

In this post we will help you build processes for identifying risk and defining the impact. The third part, i.e. mitigating strategies, will be covered in .

Structure of a Risk Assessment Process

A traditional risk assessment process is structured around these key components:

• Data collection: Gathering relevant information about the subject (e.g., client, product, transaction...).

• Risk scoring: Assigning numerical values based on the potential impact and likelihood of risks.

• Risk weighting: Assigning weight is also an option to give more or less importance to specific risk categories. For example if defining “industry” and “financial” risk as two main categories, the former could have a lower weight making the latter the principal factor of the overall risk score.

• Decision making: Using the risk score to inform decisions, like whether to proceed with a transaction or apply additional scrutiny.

You’ve hopefully built use the tools explained in the article. It is now time to build rules to assign scores of your customer information using the Calculation step, and make decisions based on those scores using the Routing step.

Build a Risk Assessment

The two main components used to build risk assessment processes are:

Calculation step

Routing step

Create customized rules: Develop specific criteria and rules based on spektr fields that align with your unique risk assessment needs.

Calculate accurate risk scores: Assign scores to each segment. Segments act as collections of rules for better organization of the overall logic. The score is assigned at the segment level, while the weight is established at the step level. 

• Create score thresholds: Identify all your score thresholds to group your customers based on your expected outcomes, for example, Low risk, Medium risk or High risk groups.

• Branch and segment your customers: Each score threshold creates a branch in your process. A branch can hold its own business logic and can be connected to subsequent processes.

Link Multiple Processes

The platform ability allows you to create not only single risk assessment processes but to develop a full suite of processes tailored to specific scenarios. For example if a customer, going through a generic main Risk Assessment, is evaluated to High risk or any other branch, you can have they go through an another "enhanced process" that calculate another risk score based on additional attributes.

Identically, your initial Risk Assessment process can be connected to any other process, like a monitoring or a loop, which we will explore next.

Next, let's look into monitoring.