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Velocity Country Risk Rating (VCRR) model is based on a modular and transparent methodology. It can be adjusted and updated in real-time based on significant events, such as, regulatory regime adverse rating, narcotics sanction, terror sanction, credit downgrade, terrorist attack or corruption conviction. Moreover, the methodology is based on multiple layers, where each additional layer captures an amount of risk that is reflected in the final score. Due to the highly modular and transparent equation driven calculations that the Country Risk Rating model employs, all risk dimensions are readily apparent to the user, providing significant flexibility in either including or excluding a specific risk dimension, based on user’s application requirements.

Risk Management Process

Identify
Identify sources of risk component.
Evaluate
Evaluate and incorporate the risk component with the associated weight factor.
Examine
Examine sources relevant to the risk component.
Test
Test applicable components via quantitative methods.
Release
Interpretation and reporting of the risk assessment results to aid risk mitigation and key decision-making
“At its core, the Velocity Country Risk Rating model is a stand-alone reality driven comprehensive risk management tool that can be used by all institutions.”

Unparalleled sources of data

An extensive array of data sources consisting of more than 400 independent and public sources introduces a rare combination of expansiveness, diversity and comprehensiveness in Velocity’s CRS model. Underlying data come from a variety of sources including data bases, news reports, event descriptions, surveys and sanction lists to name a few. This richness of data further enables Alacer to develop CRS using a rare combination of qualitative, quantitative and hybrid data that is normalized for homogeneity, processed for consistency, and corroborated via cross-verifications and triangulations.

This large data is therefore sufficiently robust and statistically random for conducting a series of statistical modeling to generate various weighting factors and coefficients at the intermediate stages of risk score calculation, whereby using a composite weighted average risk score provides various final stage risk indices.

Why Unparalleled, You Ask?

  • CRS data comes from an extensive array of more than 300 sources in a layered, adaptive process in which Velocity modeling experts conduct a thorough data cleaning, verification and sanitization checks
  • SMEs consult over 50 authoritative sources in sourcing data, bring extensive source and factor level expertise to process appropriate data sources, while conducting hierarchical and layered factor analysis in generating risk scores
  • Besides systematically capturing risk data from authoritative sources, CRS team actively adjusts individual risk scoring based on active monitoring of current events across the globe, while ensuring all ingested data is robust and clean

Multi-dimensional risk view

The global regulatory landscape is marked by a rapid increase in the volume and complexity of regulatory changes.

  • The global financial risk landscape is marked by a rapid increase in the volume and complexity of regulatory changes on one side and relentless pursuit of adaptation to bypass corporate protective mechanism on the other side, which makes risk capturing with a narrower prism ineffective and inadequate
  • Expanding regulatory requirements by various governmental and non-governmental authorities make it incumbent upon banks and financial institutions to develop and embed fully functioning risk and compliance frameworks
  • Velocity CRS framework views country risk from multiple prisms, each capturing risk from a specific and well-defined genre of risk, ranging from global regulatory, to structural terrorism, to systemic regulatory risk and several other risk factors in between
  • Multi-dimensional risk view enables Velocity CRS framework to both capture a greater array of risk types and, encapsulate various emerging regulatory risk mandates, such as, the directive from the Financial Services Authority (FSA) in the U.K. and a steady stream of European Union Directives, such as the European Market Infrastructure Regulation (EMIR), Liikanen Bank Reform and Basel Accords, to name a few, all of which imposes an heightened obligation on corporations and financial institutions to manage their regulatory risk with an umbrella approach that Velocity CRS provides its clients
The Velocity Country Risk Rating integrated risk tool provides a multi-dimensional risk view that assesses the potential for a lack of enforcement and support of various emerging regulatory regimes.

Comprehensive View Of Subcomponents In Systemic Regulatory Risk Index

Assessment is based on risk factors extracted from public data. Risk Ratings are based on in-house gap analysis in awareness and implementation

  • List Rate Risk Data
  • Financial Action Task Force: AML/CTF Mutual Evaluation
  • Foreign Account Tax Compliance Act (FATCA)
  • Basel III
  • Foreign Corrupt Practices Act: Travel Act, UK Bribery Act
  • CISADA Liikanen EMIR

Red, Yellow, Green – It can’t get any simpler than this

The final risk rating for a country is displayed in 3 different color-coding schemes -

Less Distraction, More Focus

The risk rating generation process is dynamic and formally reported on a quarterly basis
Risk ratings are continuously monitored
Risk identification is conducted on an ongoing basis
All incoming data are checked for authenticity, quality and comprehensiveness
Weighting factors or relevance rating is attached to individually ranked data sources

Country Risk Data Management Process

  • Gather Sources/ Lists
  • Normalize Data
  • List Rate Risk Data
  • Aggregate and Scale
  • Composite Risk Rating

The Alacer Advantage

  • Industry level standards Country Risk Rating model goes through a rigorous process and follows CMMi5 Level Industry Process standards
  • Comprehensive Risk Analysis Expanded granularity in risk description provides the benefit of capturing comprehensive risk for the country being analyzed
  • Hybrid Approach Hybrid approach in ingesting various qualitative and quantitative factors require efficient algorithms to combine qualitative constructs with quantitative scores, making the CRR model highly effective in capturing, categorizing and combating ML/TF risks
  • Robust results The risk review is based on verifying the quality of data, comprehensiveness of coverage, consistency of methodology, and robustness of risk ratings




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      By submitting this form, you consent to us using the details you provide to respond to your enquiry. A backup of these details will be held, but can only be accessed by authorised individuals..

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        By submitting this form, you consent to us using the details you provide to respond to your enquiry. A backup of these details will be held, but can only be accessed by authorised individuals.