Segmenting your corporate customer base for risk scoring purposes

Saskia Rietbroek, Advisory Board Member, NetPractice

Let’s have a discussion about criteria to use when segmenting corporate customers into risk categories. To get the discussion started, here are some of the criteria I would use:

Type

• Small company (2 points)
• Medium (1 point)
• Large (0 points)
• On stock exchange (0 points)
• Not on stock exchange (1 point)
• Bearer shares (2 point)
• No bearer shares (0 points)
• Related to PEPs (2 point)
• Not related to PEPs (0 points)
• Relationship with other qualified banks (0 points)
• No relationship with other qualified banks (1 point)

Services

• Cash intensive business (2 point)
• Non-cash intensive business (0 points)
• Import/export activities (2 point)
• No import/export activities (0 points)

Location

• Domiciled/incorporated in FATF member country (0 points)
• Not domiciled/incorporated in FATF member country (1 point)
• Domiciled/incorporated in “major ML concern” country (1 point)
• Not domiciled/incorporated in “major ML concern” country (0 point)
• Domiciled/incorporated in ex NCCT country (2 point)
• Not domiciled/incorporated in ex NCCT country (0 points)
• Domiciled/incorporated in country with high corruption (1 point)
• Not Domiciled/incorporated in country with high corruption (0 points)

Based on the above criteria you can make a decision matrix: 0 – 3 points: low risk 4-7 points: medium risk 8 and more points: high risk What do you do to risk score corporate customers?