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AML and onboarding risks
KRI # Risk cause/sub risk
Measures required
KRI
Comments/action
Country rating, volu
m
e of
business
Investigate and solve
4
# clients with operation in high-risk
countries (i.e. rated >5 on a scale 1 to 
8
)
Client's group structure with
countries of operation
4
Drop in average # years’ experience
in the business
Years of activity in the dpt,
per staff 
m
e
m
ber
0
# of key client to inexperienced (<1yr)
account 
m
anager
Key clients account 
m
anager,
years of activity
Provide support/
m
entoring
1
1
Exposure/activity
2
Exposure/co
m
pliance
breach
3
Hu
m
an error/
m
istakes
4
Hu
m
an error/
m
istakes
5
Hu
m
an error/
m
istakes
% of staff with less than one year’s
experience
Years of activity in the dpt,
per staff 
m
e
m
ber
0
Key client identification,
account 
m
anager
0
# files with 
m
issing docu
m
entation
4
6
Hu
m
an error/slips
7
Legal risk
8
Legal risk/
control weakness
V
olu
m
e of operations in high-risk
countries
# of key clients per account 
m
anager
# unco
m
plete due diligence
Sa
m
pling
Sa
m
ple control checks
Reinforce process/
checklist/awareness
1
9
Co
m
pliance breach/
control weakness
# of credit files without co
m
pliance
validation
Sa
m
ple control checks
Investigate
Extend sa
m
ple check/
review file co
m
pliance
1
10
Co
m
pliance breach/
control weakness
# 
m
issed updates of OFAC files
IT trail
KRI
A
G
Y
G
G
A
A
Y
Y
Y
Actual
score
5%
Stable
1
10%
10
20%
3
1
1
2%
Tolerance
level
0
<15%
(Red>1/3)
10 (Red: 20)
3%
1
<25% drop
0 (Red: 3)
0
0
<1%
1
Total score
Risk score (excess of risk appetite)
Ratings
Max score
G
Within risk appetite
0
Excess risk (%)
16
100
16%
Y
Slightly elevated, tolerated risk
1
A
Above risk appetite
4
R
Requires i
mm
ediate action
10
Risk
score
F I G U R E 1 5 . 2
KRI dashboard for AML/onboarding risks

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Risk Reporting
163
applies only if all metrics have the same relative importance, of course, and their
collective score paints a meaningful global picture, like an index.
The dashboard in Figure 15.2 displays a KRI dashboard for AML/
onboarding risks developed for an AMA bank; the combination of scores leads
to a risk excess of 16% out of a theoretical maximum of 100%. If all KRIs
scored yellow (Y), the score would have been 10%.
Governance
■
CRO on the board
■
Risk specialist in risk committee
■
Frequency of risk committee meetings
Supervisory skills and training
■
Training of team managers
■
Guidance and policy for managers and team leaders
■
Face-to-face awareness sessions
Staff conduct
■
Behaviours against prior set objectives
■
# information security breaches
■
# disciplinary cases
■
# policy violations
Culture and timeliness
■
# self reported issues
■
Occurrence date vs. reporting date of loss events
■
Overdue risk management actions against plan
■
Overdue audit recommendations against plan
Business model
■
Client sophistication/information asymmetry
■
Pricing structure vs. cost and quality
Post-sales review
■
Complaints handling and customer satisfaction
■
Product cancellations
Onboarding process and screening
■
Employees and contractors
■
Third-party onboarding
■
Client onboarding
F I G U R E 1 5 . 3
Themes and metrics for conduct risk reporting

---

164
RISK MONITORING
R E P O R T I N G O N C O N D U C T
Conduct and behavior have attracted considerable regulatory attention since the finan-
cial crisis and firms are now taking great care to monitor conduct in their businesses.
Figure 15.3 presents the common themes and metrics reported in the context of a
conduct-monitoring program. A case study presents an abbreviated example of met-
rics used to monitor conduct in financial firms, from a regulatory and operational risk
perspective.
Culture is measurable as long as it is defined by behaviors, measured and tracked
by proxies. Methods to influence and change risk culture are addressed in Chapter 12.
Culture reporting is specific to the culture of each firm and exceeds the scope of risk
reporting.
C A S E S T U D Y : E F F O R T L E S S C O N D U C T D A S H B O A R D
Table 15.1 is an abbreviated example of a real conduct dashboard (thresholds and
scores are fictitious). It is a sanitized version of a reporting dashboard we cre-
ated for a bank that needed to start reporting quickly on conduct. Using metrics
already available in the firm is the fastest and easiest way to put together a report-
ing set. This is what we did: out of all possible metrics, we ask the firm to select
the ones that were both relevant for their business model and already available.
This led to a dashboard quite seamless to create with the additional significant
advantage of displaying past data and trends over the last four quarters.

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Risk Reporting
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T A B L E 1 5 . 1
An abbreviated example of conduct metrics