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Conducting risk assessments, due diligence, and monitoring helps firms identify and mitigate financial, regulatory, and reputational risk.
FREMONT, CA: One of the significant potential time-savers for risk management professionals is technology. From initial risk evaluations before onboarding a new client to ongoing risk monitoring to surface threats more rapidly, the power of artificial intelligence and innovative analytics show considerable promise. Here are the tools to help firms identify and mitigate financial, regulatory, and reputational risks.
Know Your Customer (KYC) regulations are familiar in the financial industry. But no sector is immune to compliance hurdle—be it from customers, business partners, suppliers, M&A targets, or other agents acting on a firm’s behalf. Besides anti-money laundering and terrorist financing laws that banks must consider, firms across industries must consider anti-bribery and corruption regulations and a growing number of data privacy and security laws. Firms also require staying alert to sanctions, politically exposed persons (PEPs), and other watchlists. Conducting risk evaluations, due diligence, and monitoring of third parties needs a huge commitment in both time and resources. And firms are still vulnerable to human mistakes—from a simple typo to a significant miss like not identifying an emerging risk before it becomes disruptive.
Leveraging technology to automate customer or vendor risk evaluations or conduct ongoing batch screening optimizes the process, so firms quickly identify parties that need deeper due diligence before onboarding. Plus, firms get the confidence of updates if a customer or vendor becomes the subject of a sanction or is added to a watchlist. Risk professionals cannot escape the requirement for conducting due diligence—especially if a risk assessment decides the person or entity poses an elevated risk. But firms can look for a due diligence research tool that uses the power of AI to improve outcomes relevance.
Automated risk monitoring takes the benefit of text analysis to find key risk factors, entities named, and more to separate the noise from the news and alert firms to issues far sooner than a manual process. Plus, firms can have more confidence in the outcomes since this process scans thousands of documents in minutes, providing firms a much broader perspective.