In-depth Guide

What is Risk Intelligence?

In this guide, you’ll learn all about Risk Intelligence — the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers.

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The everyday struggle of lenders? Getting an in-depth understanding of their customers’ risk profiles.

Most data sources they use when evaluating applicants are outdated, costly, or can't provide an exact measure of the true risk value. A report from LendIt and Brighterion shows 40% of financial institutions still use legacy rules-based systems. Another 26% review customers’ applications manually when assessing financial risks.

Business rules management systems may provide some automation, but they’re too rigid to adapt, learn, or scale with the rapid growth of financial data.

This is where risk intelligence comes in.

What is risk intelligence?

Risk Intelligence is the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers.

Risk Intelligence is the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers. Instead of relying on tedious, subjective, and error-prone manual reviews, teams that use Risk Intelligence software are equipped with AI-powered fraud and credit insights that eliminate uncertainty and make risk decisions easier.

With Risk Intelligence, companies can effectively build digital trust and approve more customers with confidence.

Making accurate risk decisions can be hard, particularly in a business environment subject to constant disruption.Superior financial risk management — backed by scenario-based foresight, monitoring of early indicators, and crisis-response capabilities — can help your business gain a competitive advantage.

Let’s dive into a few more benefits of risk intelligence.

What are the benefits of risk intelligence?

Today’s risk functions are encountering unforeseen threats with increasing frequency.

It’s no wonder 79% of financial institutions prioritized enhancing risk data quality, availability, and timeliness even before the global pandemic hit.

Besides giving your business a competitive edge, risk intelligence has other benefits. Some top reasons lenders and other financial institutions use risk intelligence include:

  • Finding a granular set of data to help you improve your risk prediction models.
  • Simplifying lending processes for customers to give them faster responses without the hassles of more paperwork and waiting days for results.
  • Getting a complete picture of the risky patterns of your customers.
  • Identifying and navigating threats earlier and more effectively.

Here's a real-world example that captures the power and benefits of risk intelligence based on General Services Corporation (GSC)'s experience.

During the pandemic, GSC — a leading apartment homes and apartment management services provider — fell victim to the federal government's temporary national moratorium on evictions for nonpayment of rent. 

The directive (which meant extending tenant eviction processes by several months) significantly increased GSC’s risk of approving unqualified applicants. The company experienced an uptick in fraudulent applications as prospective tenants used altered or fake bank statements and pay stubs to substantiate their income.

All these factors increased GSC's need to identify falsified or fraudulent documents quickly and accurately while streamlining the application process and avoiding tenant evictions. With no manual way to verify the fake documents, GSC turned to Inscribe.

During a trial period, GSC experienced 12-second document verification times, 11% of documents flagged as fraudulent, and 161% return on investment (ROI). In addition, Inscribe helped the company:

  • Catch fraudulent applications
  • Save their team’s effort
  • Ensure prospective tenants meet the application criteria
  • Reduce evictions

This brings us to the next question: how does risk intelligence technology work?

How does risk intelligence work?

Like an MRI scan of a person’s physical health, business risk intelligence involves an in-depth analysis of a customer using their identity documents and transaction data to determine their trustworthiness and financial health.

Basically, risk intelligence works by:

  • Gathering all your customer’s documents (bank statements, utility bills, pay stubs)
  • Checking those documents for signs of manipulation
  • Assessing income and financial data to determine creditworthiness
  • Making a data-driven decision with the insights extracted

Instead of risk professionals using manual reviews of credit reports and other financial documents to determine an applicant’s creditworthiness, they use risk intelligence tools to manage their risk appetite, assess financial habits, and check for signals of fraud.

Through artificial intelligence (AI) and machine learning (ML), risk intelligence software analyzes millions of data points, drawing predictive power to produce detailed information beyond credit scores. Plus, you get more data to improve your in-house risk modeling and insights for better risk decisioning and painless, timely delivery of responses to your customers.

What is risk intelligence technology?

Through artificial intelligence (AI) and machine learning (ML), risk intelligence software analyzes millions of data points, drawing predictive power to produce detailed information beyond credit scores

In a volatile, fast-paced, and more complex world, banks are experiencing more operational risks than they did two years ago. Potential risks and external threats are emerging more rapidly than ever before.

There’s more pressure to create operational and financial resilience against increasing uncertainty and unpredictable risks and shocks. Risk intelligence technology helps banks stay in business without compromising their financial integrity or security.

These tools use AI and ML to analyze the data from customer documents and check them for signs of manipulation (to assess trustworthiness) and extract credit insights (to assess creditworthiness). That way, lenders can better understand the potential risk and mitigate it more effectively.

In addition, the software assesses many data points, allowing lenders to quickly realize actionable intelligence that helps protect them from losses.

What types of risks can risk intelligence technology mitigate?

Across the financial industry, risk intelligence applies to an ever-increasing number of risks, including:

  • Credit risks: The potential loss lenders suffer when customers fail to pay their debts. Risk intelligence tools can conduct more thorough default probability analysis and enhance early detection and warning signals of such behaviors.
  • Fraud risks: These come from fraud threats from ever-increasing attack vectors in a connected world. Risk intelligence software detects suspicious activity, mitigating these risks by identifying IT system anomalies and predicting attacker behaviors in advance.
  • Compliance risks: Financial regulatory compliance is a complex and rigorous process that if handled carelessly can result in legal sanctions, reputational damage, and financial loss. Risk intelligence technologies help detect compliance gaps while ensuring adherence to laws, standards, and guidelines.

Gain more risk intelligence

Financial institutions are highly susceptible to risk. Sophisticated risk intelligence tools like Inscribe, which offer advanced analytics and automation, are reshaping how lenders handle risk management and fraud prevention.

Inscribe’s Risk Intelligence technology offers a capable, real-time, and effective way for you to:

  • Automate manual reviews
  • Reduce fraud risk, losses, and operational costs
  • Increase accuracy and efficiency of risk decisioning

It’s no wonder leading fintechs like Ramp, Plaid, Bluevine, and Navan trust Inscribe to uncover the insights they need to assess risk and build digital trust.

Interested in joining their ranks?

Talk to an expert today to learn more about Inscribe’s Risk Intelligence technology. 

Want to learn more?

Check out our other guides on risk intelligence:

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