Decoding EWRA: Mastering Risk Weighting for Comprehensive Risk Assessment

Decoding EWRA: Mastering Risk Weighting for Comprehensive Risk Assessment

Enterprise-Wide Risk Assessment helps a company adopt a risk-based approach and apply controls commensurate with the risks. While performing EWRA, one of the essential aspects to consider is the weightage to be provided to the variety of risks the company is exposed to. If the risk weightage isn’t adequately assigned, the resultant risk scoring wouldn’t be appropriate.

The above infographic highlights various considerations while determining the risk weightage for risk factors a company is exposed to. An objective methodology will help organizations customise risk assessment as different risk factors carry a different degree of risk.

Further, the risk weighting helps deploy the appropriate resources to counter the risks, as not all risks are equal. High-risk scenarios require Enhanced Due Diligence, and assigning appropriate risk weights ensures enhanced scrutiny is conducted for high-risk clients.

The assessment of risk weights helps document AML/CFT policies and procedures in line with the EWRA. Once the risks are appropriately weighted, they help management make informed business decisions.

Adopting a scientific methodology in assigning risk weights is pivotal for a robust AML/CFT framework. It helps comply with the legal framework and keep ML/FT risks at bay.