4 Risk Assessment Parameters

This chapter provides the details of each of the risk parameters or rules with examples of how the risk score is derived at a parameter or rule level.

The following table defines the risk assessment parameters or rules and provides details irrespective of the customer type and the risk model type.

Table 4-1 Parameter or Rule

Parameter or Rule	Details	Calculation
Geography Risk - Country of Primary Citizenship	The risk associated with the country of citizenship of a customer. The system considers the primary citizenship from the customer table.	If a customer's primary citizenship country is Romania, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Geography Risk - Country of Secondary Citizenship	The risk associated with the country of citizenship of a customer. The system considers secondary citizenship from the customer table.	If a customer's secondary citizenship country is Romania, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Geography Risk - Country of Residence	The risk associated with the country of residence of a customer. The system looks for the country of residence from the Customer table.	If a customer's country of residence is in Australia, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Geography Risk - Country of Taxation	The risk associated with a country where the customer pays tax. The system considers the country of taxation from the Customer table.	If a customer's country of taxation is in the UK, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Source of Wealth	The risk is associated with the source of wealth defined by the customer. The system considers the wealth source from the Customer table.	If a customer's source of wealth is Gambling, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Occupation	The risk associated with the occupation a customer performs. The system looks for the Occupation from the Customer table.	If a customer's occupation is Financial Services, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Length of Relationship Risk	The risk associated with the length of the relationship a customer has with the bank or FI. The system calculates the length of the relationship by comparing the customer’s Add Date from the Customer table with the risk Processing Date.	There are different ranges for defining the length of the relationship. The minimum and maximum ranges are configurable. For example: Less than 12 months 13 to 36 months More than 37 months. The system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Watch List Risk	The risk associated with the customers being listed in the watch list maintained by the bank. The score assigned would be based on the list where the customer is matched.	If the customer is on a trust or exempt list (that is, a list with a risk <0), Watch List Risk --> 0 If not, (highest risk of the matched list x 10).
Watch List Risk for Interested Parties	The risk associated with the interested parties and beneficial owners of a primary customer available in the list maintained by the bank for the watch list. If there are multiple interested parties and beneficial owners, the maximum score is considered as the risk score.	If the customer is on a trust or exempt list (that is, a list with a risk <0), Watch List Risk --> 0 If not, (highest risk of the matched list x 10).
Geography Risk - Countries of Operations	The risk is associated with the country where the customer's business is being operated. The system considers the Country of Operations from the Customer Country table. If there are multiple values for the country of operations, then the KYC system considers the maximum score of all the values.	If a customer's Country of Operation is Europe, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Geography Risk - Country of Headquarters	The risk associated with a country where the headquarters of the customer is located. The system considers the Country of Headquarters from the Customer's Address table where the address purpose is defined as Business.	If a customer's Country of Headquarters is Albania, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Industry Risk	The risk associated with the industry where the customer is employed. The system considers Industry from the Customer's table.	If a customer's Industry is banking, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Legal Structure & Ownership Risk	The risk associated with the legal structure of a customer based on whether it is publicly or privately held. The system initially determines if the customer is publicly or privately held, and then looks for legal structure from the Customer table.	If a customer is publicly held and the legal structure ownership is Trust, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Corporation Age Risk	The risk associated with the age of the corporation in the industry. The system calculates the length of the relationship by comparing the Date of Incorporate from Customer table with the risk processing date.	There are different ranges for defining the length of the relationship. The minimum and maximum ranges are configurable. For example: Less than 12 months 13 to 36 months More than 37 months. The system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Risk Associated with the Markets Served	The risk associated with different markets served as stated by the customer for its operations. The system considers the maximum score of all the Markets Served from the Customer to Market Served table.	If a customer has investment banking and retail banking as Markets Served, the system considers the Jurisdiction Market Served table. If there are multiple values, then the system picks the maximum score associated with this value.
Risk Associated to Public Company	The risk associated with the type of the company, public or private. The system considers whether the customer is publicly or privately held from the Customer table.	If a customer is privately held, the system looks for the Risk Score of value associated with this parameter from the Parameter Risk Score Jurisdiction table. The scores are picked for a risk parameter as per customer jurisdiction.
Risk Associated with the Products Offered	The risk associated with the different products served as stated by the customer. The system considers the Products Offered from the Customer to Products Offered table. It would even consider the effective and expiry date and compare it with the risk processing date. If the expiry date is not provided the system considers risk assessment.	If a customer has loans and credit cards as Products Offered, the system considers the Jurisdiction Products Offered Served table. If there are multiple values, then the system picks the maximum score associated with this value.
The risk associated with Method of Account Opening	The risk is associated with a different method of account opening. For example: Online, Walk-in, Phone.	If Customer A opens an account A 1, he also has 3 other accounts, A2, A3, and A4. During processing KYC checks for all the four accounts values for the Method of Account Opening and assigns the maximum score derived from the map tables for each of the value for these accounts.
The risk associated with Account Type	Risk Associated with the account type which is associated with the account being opened. Based on the different products or services associated with an account, the account type can be defined. For example: Account Type – Savings1, Products or Services – a, b, c Account Type – Savings2, Products or Services – a, d, x.	If a Customer A opens an account A 1, he also has three other accounts, A2, A3, A4. During processing KYC checks for all the four accounts values for the Account Type parameters and assigns the maximum score derived from the map tables for each of the value for these accounts.