However, what is risk orchestration exactly? Since it has only just become widely recognized, it is still somewhat of a novelty in the risk management industry. It has only been around for four or five years. Furthermore, there doesn't seem to be a single, widely accepted definition in the industry, therefore there appears to be some misunderstanding among organizations about what it actually implies.

This was particularly evident in a recent round of in-depth research interviews that Oxford Economics carried out on behalf of LexisNexis Risk Solutions. In these interviews, a sample of C-suite executives in the risk management industry were questioned regarding their experiences putting risk orchestration platforms into place in their companies.

The recruitment procedure for participants was based on their ability to either supervise the development of risk orchestration technology internally or play a key role in locating and incorporating risk orchestration technology from a third-party vendor. These were the two primary paths to success.

Building your own orchestration platform could be nearly three times more expensive than working with a platform provider to deliver a plug-and-play solution, according to a previous analysis by LexisNexis Risk Solutions comparing the costs of doing it internally with specialized development resources.

The qualitative research's findings revealed that there are wide differences between people's conceptions of orchestration and the kind of orchestration they have used in their own organizations. The primary source of misconception is the distinction between a genuine orchestration platform and a hub performance.

It seems that a lot of organizations have only used APIs to "tie" together their current systems, procedures, and data sources in order to achieve their orchestration aim. A hub won't really synchronize process workflows or risk scores; instead, it will centralize some processes and outputs, such transaction monitoring, IDV checks, and sanctions screening, and maybe create a user dashboard view. This arrangement is not authentic.

Customizable journeys are made possible by a real risk orchestration platform that synchronizes procedures and data. Waterfalling ensures that relevant checks are only done when necessary, reducing friction and costs. Sincere clients receive priority handling, while others are referred for further investigation. In order to generate a single picture of customer risk, a single risk score, and automated decision making, the technology integrates several systems and procedures.

This comparison, provided by Chris Foye, senior director of market strategy at LexisNexis Risk Solutions, succinctly captures the differences between the two:

"A simple hub essentially shows you what the vendor in question wants you to see. Envision engaging in a dialogue with 10 individuals, each expressing themselves in a distinct language. What is the probability that the discussion will result in a well-reasoned decision? This is comparable to how your company receives risk information from a hub.

"A hub just serves to unite many "voices." When they use a genuine orchestration platform, everyone communicates in the same language. The most thoughtful discussions and effective communication result in the most business-appropriate conclusions.

It follows that when a so-called orchestration platform falls short of expectations, frustrations inside the organization are understandable.

One highly seasoned MRLO for a UK fintech voiced their dissatisfaction with hub solutions—also referred to as orchestration platforms—during the qualitative interviews for the 2023 research conducted by LexisNexis Risk Solutions and Oxford Economics:

"A lot of these players present themselves as venues for orchestration. You discover that they are only responsible for a single piece of the anti-financial crime jigsaw. In order to find the fraud tendencies you wish to reduce, you frequently need to add another platform on top of it.

"I've never encountered anyone that utilizes just one orchestration system, so when I join a business, I try to look at the systems, the organizations, how they're setup, who uses them, and how the case management flow is managed through them. Sometimes we have to link these things in our own unique ways; other times, we just need to plug and play them together. How do you handle a case from beginning to end, ensuring that the desired results are obtained and that all aspects are continuously calibrated and sent back to minimize false positives?

The respondent continued by outlining the ways in which this leads to inefficiencies in the risk management procedure:

"You have alert-generating systems that need to be attended to, yet a single transaction might result in several types of notifications. What I discovered is that various teams are frequently working on the same (or portions of the same) alerts, sometimes in separate buildings.

A single picture of client risk is not quickly or properly achieved in a hub arrangement, in contrast to genuine risk orchestration, due to a lack of harmony between the processes.

Throughout our conversations, this was repeatedly brought up, with participants lamenting "orchestration platforms" that were really hub platforms. Other related issues included legacy technology, compartmentalized processes, siloed thinking, and the choice to develop an internal platform rather than purchase a genuine risk orchestration solution.

What makes this so crucial?

To put it briefly, an integrated risk score is not provided by a hub. Rather, your team must aggregate a multitude of disparate scores and indications from the many systems and data channels in use to get your own risk score. Because of this, procedures that are counterproductive to the goals of a digital transformation program are required; because people are doing the bulk of the work, it is not always precise, timely, or efficient. all of which have the potential to significantly affect your company's operations, clientele, and reputation in the end.

All of these procedures are smoothly coordinated to provide a unified picture of client risk in real risk orchestration. Making informed decisions is easier, more accurate, efficient, and seamless. This has an influence on customer satisfaction, which may be greatly increased by how quickly people are verified and assisted, as well as the general efficiency of compliance procedures in terms of time and resources used.

In light of this, you might actually realize a financial gain by effectively orchestrating risk into your compliance procedures. According to the LexisNexis Risk Solutions True Cost of Compliance, 2023 report, the most recent estimate of the cost of compliance for UK financial institutions came to a conservative value of over £30 billion annually, or £194 million for the typical organization. This includes the money spent on personnel and technology merely to abide with current laws.

Therefore, assuming efficiency translates into cost savings, even a 5% compliance efficiency boost acquired through orchestration would more than cover the anticipated £2 million in procurement, setup, and operating expenditures for the first three years of platform acquisition. These impressive numbers highlight the necessity for all businesses to look for efficiency improvements across the client lifecycle, such as those that genuine orchestration provides, wherever they may be discovered.

Do you want to know more? Fintechs looking for a risk orchestration platform provider that can help them get better client experience, greater compliance, more protection, and lower ownership costs should consult The Essential Buyer's Guide to Risk Orchestration. Fintechs looking to engage in risk orchestration to optimize their whole client lifecycle and regulatory screening procedures should definitely read our free guide.