Do you understand the Compliance Cost of your ‘Amber Management’?
‘Amber Management’ is a term we use at NorthRow to describe how you manage the ambiguous cases within your compliance processes. A world of binary results of either pass or fail, (Green or Red) would be nirvana; but that just isn’t realistic. There will always be cases that require further due diligence before you safely commit to onboard, or continue to interact with the customer, or not. Ambers are those cases that fall between the ‘accept’ or ‘decline and cause your business a challenge.
It is at this ’Amber’ stage that the compliance pain occurs. The challenge of not knowing how many ‘Amber’ cases you have at any one point will impact your operational efficiencies. Manual intervention, with additional headcount and internal resources, will be required and customer friction rises. Not being able to measure the Ambers results in a lack of reporting which in turn means understanding why and how to resolve the ambiguous cases is more challenging.
How your compliance teams manage, track and convert Ambers can bring operational gains, improve risk processes, and ultimately create a competitive advantage.
The depth of the problem
Our research shows that 90% of an organisation’s compliance costs sits in just 10% of Amber cases.
NorthRow has conducted research within the market, speaking directly to risk professionals, customers and partners to understand the depth of the Amber Management problem. What we found was surprising.
Many of those interviewed were unable to confirm the volume of Ambers they currently had within their processes. As a result there was a lack of reporting and understanding of how much resource was being consumed with the ambiguous cases.
For those that were measuring Amber cases, we found that the majority of the compliance resource and compliance costs were taken in manually verifying this smaller percentage of cases
Amber management statistics
During a recent Amber Management Webinar, we polled over 280 risk professionals to learn more about their approach to Amber Management. The results are as follow
63 percent of the audience do not measure or understand, the number of ‘Ambers’ currently in their onboarding or refresh cycles or the impact it is having on their business.
Based on our research this isn’t surprising, however, it demonstrates the scale of the Amber management problem. There is a huge opportunity within the compliance function to improve operations and reduce client due diligence manual workload simply by identifying ambiguous cases.
The poll revealed that 40% view Amber Management as a compliance issue and not a wider business issue. Only 27% see it as a 1st Line of defence issue with 33% seeing it as a problem for their clients.
However, when looking at the issue in more depth we know the impact crosses much of business if poor Amber Management is allowed to continue. It impacts the commercial success as well as the entire sales, provisioning and customer retention functions.
54% of the audience recorded that risk appetite is the most influential element of an organization’s approach to risk management.
Whilst we were not surprised by the result it is disappointing to see that customer experience doesn’t rate higher. As we move into a more digital-led world we believe that a higher priority will need to be given to customer experience for businesses to achieve growth and remain competitive.
The risk of poor Amber Management
Increased time to revenue
Additional research shows that a large proportion of Ambers are often cases that will eventually be onboarded or retained. The longer a business takes to onboard a client the longer the time to revenue. Not only does the wider business require minimal time to revenue but placing revenue at risk of customer churn is not good practice.
Poor customer experience and high attrition
Creating friction in the compliance journey increases attrition rates. In an increasingly digital world, competition is fierce. If Amber Management is poor, your prospects will lose patience and migrate to a competitor that focuses on customer experience.
In our experience, a lack of visibility for the volume of Ambers results in a higher proportion of manual tasks. By using Amber Management insight a business can not only allocate the correct resource but look to identify trends and automate tasks to a greater extent.
Moving from Amber to Red
If Amber cases are lost in the system or left to manual processes there is a risk that the client status will change. The information you hold on your client or prospect can change quickly and become out-of-date. Subsequently, the business is now sitting on a different set of risks from the initial onboarding. Having an increased number of ‘Reds’ or fails due to poor management places the compliance team and wider business at greater risk.
Overly risk-averse encourages poor behaviour
If an organization is overly risk-averse, the first line of defence (sales and support teams) will attempt shortcuts to ‘smuggle’ unverified clients through loopholes in your compliance function. If your sales team is waiting too long for the approval of an Amber case, they may be at greater risk of taking matters into their own hands. Often a divide between sales and compliance has the opportunity to grow if lengthy processes delay the sales cycle.
Data orientated insights
Managing your Ambers is key to move beyond Knowing your Customers to truly Understanding your Customers. Imagine a world where you could use a tool to identify exactly where all your compliance cases sit in the process of onboarding and ongoing monitoring. Imagine a world where ever-increasing compliance cost and lengthy remediation projects are no longer required as you can manage and predict future trends.
You are moving one step closer to nirvana! By using a powerful software tool that uses comprehensive data sets your business can achieve the following:-
- Reduction in manual referrals
- Real-time view of all tasks in your compliance workflows
- Ability to generate valuable business and management reports
- Automation of low-risk amber cases
- Auditable trail of actions
- Proactive approach toCompliance
- Improved time to revenue
Recognising that compliance teams are constantly overwhelmed and have real pain points of balancing risk management, internal resources and operational needs, NorthRow have developed a tool to specifically deliver against these daily challenges.
NorthRow Insights is a management tool that provides a series of dashboards giving a real-time view of your compliance workflows.
By using a series of rules the dashboards and workflows will provide alerts and triggers to break down the compliance responsibilities into clear and manageable tasks.
Improving the way your organisation manages Ambers will deliver improved customer experience; reduced manual processes; improved compliance satisfaction; improve revenue and reduce compliance costs; achieve greater compliance and deliver real benefit to the entire organisation.
If you would like to learn more about using this approach towards assuring compliance within your organisation then get in touch with the NorthRow team to book a Demo.