Weighted Risk Model

To provide a more sophisticated risk assessment, customer can utilize the Weighted Risk Model. Unlike the point based model, this approach allows you to prioritize specific risk factors based on their importance to your organization’s risk appetite.

Weights and Proportional Impact

In this model, every risk indicator is calculated by multiplying its assigned Weight by its Risk Score. If an indicator has multiple scores, the system automatically selects the highest one to ensure no risk is overlooked.

To arrive at the final result, the system sums up all weighted risk values and divides them by the total weight of all indicators.

• Example: If you have two indicators with a weight of 100 (scoring 5 and 9) and one with a weight of 50 (scoring 3), the system calculates the weighted average (e.g., 6.2).

The overall risk level (Low, Medium, or High) is then defined by your configured thresholds. This means you can easily adjust the "sensitivity" of the system—for example, by lowering the threshold so that a score of 6.2 triggers a High Risk instead of Medium.

HRM and LRM Multipliers

To ensure that critical risks have an appropriately large impact, the system uses High Risk Multipliers (HRM) and Low Risk Multipliers (LRM). These are used when you want certain values to have an exponential rather than linear effect on the total score.

HRM (High Risk Multiplier)

The HRM is triggered when a risk score exceeds the middle value of your scale. Instead of just adding to the total, the system calculates an Adjusted Value that grows more aggressively the higher the risk is.

• Exponential Impact: By choosing different HRM levels (from 20 to 100 (MAX), you control how much a high value "boils over" and impacts the total. A score that is slightly above average can be amplified significantly to ensure it catches the compliance officer's attention.

• The "MAX" Override: The highest HRM setting can be used for critical hits, such as a PEP-match. This effectively sets the indicator's influence to a level that ensures the entire project is classified as High Risk, regardless of any other positive factors.

LRM (Low Risk Multiplier)

The LRM works on the same principle but for scores below the middle value. This allows you to give significant "positive" indicators an exponentially stronger impact in lowering the total risk score, rewarding low-risk profiles more effectively.

Manual Overrides

Authorized users can manually override the final risk classification. Any override requires a mandatory comment, ensuring a complete and audit-ready history of the decision-making process.

Summary

The weighted risk model is designed to provide security and peace of mind. By focusing on standard weighting for general trends and HRM/LRM for exponential impact on critical exceptions, you gain a tool that both streamlines your workflow and significantly reduces the risk of human error in your compliance process.