From ITC a roadmap to build an integrated risk management framework for identifying risky trade transactions

One of the main responsibilities of border regulatory agencies involved in cross-border trade transactions, and Customs in particular, is to expedite the supply of goods while ensuring compliance and safety. Among the tools that are mainly used to reconcile the functions of controlling the international movement of goods with the needs of trade facilitation, there are the risk profiling, scoring and management techniques: all activities that such agencies today usually conduct with the support of specific IT and data analysis systems. The reality, however, is that both Customs and the other regulatory agencies use data analysis almost exclusively for conducting risk management and risk scoring activities, while such techniques could be used also for facilitating trade, as explained in this article that we published a few years ago in the World Customs Journal. Another problem of risk analysis systems, especially in economies in transition, is that they are often not integrated with each other. Accordingly, risk analysis is normally conducted separately by each agency, without cooperative relationships among them, as joint risk analysis are quite rare.

A multi-agency, coordinated approach to risk management based on joint collection, development and management of risk indicators, as well as on intelligence sharing and joint analysis of threats, is the real success factor behind international trade operations that are efficient and safe.

A publication from the International Trade Centre (ITC) titled "Managing Risk for Safe, Efficient Trade, Guide for border regulators", explores ways and steps to be taken to achieve a higher degree of integration between the risk management systems used by Customs and other regulatory authorities through the development of a framework capable to optimize the use of such tools, paving the way to the use of coordinated and cross-border joint controls and operations. Moreover, as risk analysis are conducted with the support of computerized systems, the achievement of this objective also requires a harmonization of risk management methodologies and data between the concerned government authorities.

Lastly, the ITC publication offers a roadmap that shows regulatory agencies, especially in developing countries, how to build modern, integrated risk management and compliance systems at the border. The roadmap is based on 4 layers: 1) Organizational level: implementation of formal risk management within regulatory agencies; 2) Regulatory system level: ensuring that relevant regulatory systems – those containing border control as a building block – support the Sustainable Development Goals (SDGs) and are risk-based; 3) Import compliance level of a regulatory agency: applying profiling and targeting techniques in regulatory agencies responsible for border control to evaluate the non- compliance risk of incoming shipments; 4) Integration level: integrating the import compliance systems of regulatory agencies involved in border control.