Challenges of Applying Objective, Quantitative Measures for Formal Risk Appetite Statements in the Financial Crime Compliance Space

Author: Joseph Weber, CAMS-Audit

The personnel and teams of the internal audit function at large financial institutions responsible for evaluating the effectiveness of controls pertinent to anti-money laundering (AML), sanctions programs and corruption should assess that management has defined and the board has approved a clear statement of risk appetite. Risk assessments for financial crime within individual lines of business and across the entire enterprise should be regular exercises. However, the logical articulation of the acceptable amount of risk for which one cannot avoid or control, (i.e., the appetite for residual risk), is equally valuable.

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