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Risk Orchestration: Debunking Myths Surrounding The Financial Crime Tool

Risk orchestration is rapidly cementing its position as the best way forward in preventing fraud and financial crime throughout the customer lifecycle. So, how do those companies still catching up, make the switch?

Nina Kerkez is a part of the consulting team at LexisNexis® Risk Solutions, which harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe.

She started her career in business-to-business marketing, eventually transitioning her talents to technology product development.

Here the AML specialist explains why now is the perfect time to adapt, and debunks some of the myths preventing integration of fraud and financial crime risk orchestration technology.

Nina Kerkez, Director of UK&I Consulting, LexisNexis Risk Solutions
Nina Kerkez is a part of the consulting team at LexisNexis Risk Solutions
Risk orchestration: a brief introduction

The term risk orchestration is still relatively new, so you might not be 100% clear on what it is, or why it’s an important step in cracking down on fraud and financial crime. There’s a lot that I could say about it, but here’s a simple top-line explanation.

A study by LexisNexis® Risk Solutions revealed that, on average, financial services providers rely on five external vendors for data sources to carry out financial crime screening and onboarding checks.

These multitudinous checks are often carried out in isolation because of a complex system of legacy tech stacks and systems that don’t speak to each other.

Risk orchestration brings together an organisation’s entire customer onboarding and ongoing risk management activities into a single, easily configurable, and scalable platform.

It gives organisations a single view of customer risk, integrating best in class solutions and data services to facilitate more informed business decisions and drive down compliance costs.

“By embracing innovative technology, you can gain a deeper understanding of the risk facing your organisation”

To put it another way, imagine your company’s various customer onboarding processes and fraud checks as musicians in an orchestra. Allowing them to play with no direction would result in chaos. Risk orchestration technology acts as the conductor and sheet music, ensuring that all systems are playing the same tune together in time and in harmony, to produce the optimal result.

If you haven’t already, should you be considering risk orchestration?

In a word, yes!

For any business planning to scale up their operations, enter new markets, free up employees to support other business critical projects, or provide quicker and better customer user experience, then fraud and financial crime risk orchestration can help.

By embracing innovative technology, you can gain a deeper understanding of the risk facing your organisation – both on a ‘big picture’ and minute detail level – drive efficiency and reduce fraud.

However, as exciting an opportunity as this can sound, there is sometimes an understandable nervousness in making the jump to a risk orchestration platform. Even when the promise of significant process and efficiency improvement is real, organisational change can be an intimidating prospect, leading many risk managers to reason “well, if it ain’t broke…”. But, if you ask me, the advantages to be gained mean not changing to an orchestration model is the real risk at this stage.

Debunking the myths and misconceptions of moving to risk orchestration

There are a number of things I hear from people who are apprehensive about making the move from risk management to risk orchestration and I wanted to share some of them here.

1. Compliance and administrative staff often lack the technical skills to operate new technology and interpret results.

In the past three to five years, many larger, well-resourced fintechs have seen their IT departments grow and, in several cases, technical teams are being formed that specialise in supporting financial crime and risk compliance activity. Others are implementing cross-discipline training for their staff and educating their compliance teams to become more tech-literate and training their IT specialists in financial crime compliance.

Moreover, user experience drives the design of the latest risk orchestration platforms. Compliance teams can easily configure and adjust their risk management processes using natural language and without IT support, whilst a simple, combined risk score helps them to interpret risk signals more easily.

2. Some fintechs do not have enough data to realise the benefits of risk orchestration

It’s true that some organisations struggle to realise a return on investment from new technology because their existing data is in poor shape and hard to extract and integrate from different systems. Others may not have sufficient data to benefit from artificial intelligence-powered systems.

Major emphasis is now being put on rectifying this. A UK-based merchant bank, for example, with around 4,000 employees is tackling the issue head on by cleansing their data, making it more accessible, and finding better ways to extract it from various systems. At the other end of the scale, challenger banks and smaller financial institutions with a lack of data at their disposal are partnering with risk orchestration providers to access, cleanse, and leverage data in new ways, as well as introducing complementary data from external sources.

3. Fintechs are concerned a risk orchestration platform will not be compatible with their current systems

This couldn’t be further from the truth. Leading risk orchestration platforms are flexible and easily configurable, helping financial organisations to realise the full potential of all new and legacy systems. Integration is simple, via a single API, and configuration is possible using natural language, without the significant cost of large technical teams.

Ready to take the first steps?

For more information about fraud and financial crime risk orchestration, download LexisNexis Risk Solutions’ eBook.

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