Customer Risk Ratings
Question: When we are assigning risk ratings to our customer base, should the risks be assigned to each customer or can we group like customers together?
Answer: The risk rating system does not have to be so minute that each customer is specifically analyzed and reviewed with due diligence. In general, ratings can be assigned by customer group. However, the attention given to specific customers should increase as risk increases. The higher the risk, the more attention you should give individual customers. If you rate risk on a scale of one to five, the low risk groups could be considered routine as long as there are no changes. However, the highest risk group and the next risk group should get much closer attention. Due diligence is called for on a regular basis.
You should also have a technique for identifying changes in behavior that could indicate risk. Your low risk consumer checking and savings customer could start to move large sums of money. Even though the customer was appropriately graded as low risk, you still must be able to find this change and respond to it.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 12, 10/05
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