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When it comes to the data used for predictive modeling and risk management, you can’t afford to leave anything to chance. Risk managers today have an ever-increasing number of AI applications and risk management tools to improve risk visibility and expedite their due diligence and risk monitoring processes.
To monitor risk in the most valuable way, these tools and applications must have rapid access to a large quantity of high-quality, relevant reliable, and timely data. But, in this ever-shifting data landscape, it can be hard to identify quality data to get the maximum benefit from your qualitative and quantitative risk analysis.
To help you get to the bottom of what data will make the most difference for you, and why the data quality matters, we’ve outlined five ways risk managers can benefit from using quality data for their predictive modeling and risk management efforts, as well as how to identify quality data and where to find quality data with the depth, breath and veracity you need as efficiently as you need it.
Critical PEPs, sanctions, watchlists, and adverse media data are crucial to a basic understanding of who you should or should not be doing business with, but keeping up with these changing lists can be a challenge. As ever-changing global regulations and geo-political events alter the landscape daily, you can supplement your due diligence by checking customers and partners against these data sources for expanded context. For example:
In practice, a financial institution can enhance its customer due diligence by integrating sanctions and watchlists, ensuring that they don't engage with individuals or entities that pose compliance risks which could put them on the hook for financial or legal repercussions.
For example, in 2022, MidFirst Bank violated Weapons of Mass Destruction Proliferators Sanctions Regulations by keeping accounts for and allowing payments on behalf of two individuals added to Office of Foreign Assets Control’s (OFAC) List of Specially Designated Nationals and Blocked Persons (the “SDN List”) for 2 weeks post-designation. MidFirst claims this stemmed from them not understanding how often the list was amended and how often they should be checking it to ensure none of their customers were on the list. However, if they had access to up-to-date, quality data, they could have avoided these issues.
MORE: Key trends in risk and compliance
In addition to understanding the current climate, the right datasets allow you to identify of previously unknown risk and assess the impact that could have on your business.
Without complete information, unknown risks are bound to slip through the cracks because they simply won’t be flagged. By infusing your tools and applications with quality datasets, you close those cracks, thus avoiding the potential organizational harm.
For example, say you are wanting to expand your operations and planning to put your new factory or warehouse in a new area: you may expand to that new area without knowing that location faces consistent periods of adverse weather. Adding a new building could increase production, but operations issues could arise in the transportation and shipping of your product that could cost you more money in the end. Alternatively, ignoring these risks could lead to lawsuits should a costly accident happen.
Monitoring and recognizing risks before they happen—even if they weren’t on your radar—is the best way to keep you and your business protected from unexpected costs or consequences.
MORE: The new era of due diligence
Access to a greater depth and breadth of data allows you to easily identify emerging trends, be it possible disruptions or growth opportunities. Risk managers can use the identification of emerging trends to give their C-suite a comprehensive and timely view of their best option by comparing current trends and making predictions about what’s to come.
Let’s say you are assessing the environmental, social, and governance (ESG) impacts of your business and wanting them to align with current consumer sentiment. If you only use internal data, you will not get a full sense of the marketplace because you will only see what your customers have done thus far, which is past behavior.
By supplementing with third-party data, you can gauge global consumer sentiment and better present a plan to convert competitors’ customers to your brand.
MORE: Due diligence for third-party environmental impacts
The use of curated, enriched data helps you gain further insights into companies and people that may have otherwise remained unseen. Ready access to enriched data means you can provide more context for business intelligence, allowing you to make connections you might not have in a cursory search.
For example, by accessing additional risk information present in social media—in addition to other channels--you could learn about possible online data breaches have occurred in other companies. You can then use that information to further determine your own vulnerabilities, as well as the likelihood of that threat occurring and what impact it would have on your brand.
You can then use that information to make a fortified risk management plan that implements IT security measures and continues to evaluate them to ensure they are consistent working to their greatest extent.
MORE: The changing roles of risk managers in the age of data, technology, and AI
The ability of your company to build efficiency into your routine due diligence checks on individuals and/or entities using pre-defined news terms cuts down on the time you spend on data wrangling. It altogether eliminates the need to do this task manually.
Imagine your company has an existing plant in a place with extreme weather issues. By quickly being able to run risk assessment on developing weather, you can determine when it is finally safe to release transport vehicles and avoid a higher risk of road accident during the height of the weather event. It allows you to increase worker safety, ensure your product is neither delayed nor damaged/lost, which means greater time to focus on your bottom line.
MORE: Keeping up with supply chain intelligence to mitigate disruption
High quality data can take your risk management from basic to excellent and ensure that you have everything you need to make decisions to protect your company. That’s why investing in data from Nexis Data as a Service is so beneficial for risk managers. Through our expertly enriched, semi-structured data via flexible APIs—Search and Retrieve, Constant Call or Bulk APIs—you can easily integrate Nexis DaaS into your in-house risk management applications.
As a trusted content aggregator for over 45 years, no other company has the same quality or quantity of data that we do, and Nexis Data as a Service can connect you to content that’s critical for improving risk monitoring. With millions of documents, news sources, and watchlists updated daily, you will always be at the forefront of innovation, risk avoidance and risk control, which your C-Suite will love to hear. Get started today!