Top 10 Risk Management Articles from 2015

By Lowers & Associates,

risk management

As 2015 comes to a close, we are pleased to share our most popular articles from the Risk Management Blog in 2015.

1. 4 Red Flags of Money Laundering or Terrorist Financing

One of the most important aspects of BSA/AML compliance is the responsibility it places on regulated financial entities to report suspicious transactions. This responsibility requires an organization to be able to monitor and identify transactions, evaluate them in real time, and flag the ones that are suspicious. In many cases, a Suspicious Activity Report (SAR) should be filed with the Financial Crimes Enforcement Network (FinCEN).

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2. 5 Key Components of a BSA/AML Compliance Program

You are most likely familiar with the Financial Crimes Enforcement Network (FinCEN) which is a bureau of the Treasury Department. FinCEN’s mission is “to safeguard the financial system from illicit use and combat money laundering and promote national security” through the use of financial services information.

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3. The Important Role of Internal Controls for AML Compliance

It is well understood that money launderers use deceit or theft to capture the processes of financial entities for illicit purposes. As a result, your AML compliance program must implement internal control designs that increase the chances of preventing or detecting such activities.

Read full post > … Continue reading

Beyond Ashley Madison: What’s a CSO to Do?

By Lowers & Associates,

ashley madison

Authors: Joe Labrozzi and Michael Gaul

Imagine waking up to news reporting the credit card data of 37 million people has been hacked. And then learning that among the hacked are employees of your company who used their corporate email accounts to sign up for a service that connected people for the purpose of having an illicit affair.

What goes through your mind?

Do you ask, how can people be so stupid? Or do you ask other more salient questions such as: … Continue reading

Social Engineering: How Strong is Your “Human Firewall”?

By Lowers & Associates,

There was a time, not long ago, when the term social engineering meant the manipulation of behavior and various outcomes through public policy. It referred to political issues.

The digital revolution has led to a new meaning for the term, and it’s one you should know about: “social engineering” is a threat to data system security based on “the art of influencing people to disclose information and to get them to act inappropriately.”

In other words, it’s a con job to get people to reveal things about their passwords and related digital assets to help thieves gain access to a system or database.

The important point about social engineering is that it is another human risk factor that you need to address in your risk management plan. Your efforts to harden the computer systems in your organization against technical intrusion will be pointless if the people who have access to them are vulnerable to social engineering attacks. … Continue reading

3 Risk Management Practices of Industry-Leading Organizations

By Mark Lowers,

Managers in every organization are responsible for achieving the objectives identified in their organizations’ strategic plan. We commonly think of these as positive outcomes, such as increasing sales, maximizing profits, expanding market share, and the like.

But outstanding leaders know that there are threats as well as opportunities in the environment, and they work to manage these risks just as actively as they seek to maximize gains. For industry-leading organizations, avoiding or minimizing the costs of foreseeable risks is an integral part of the total performance of the organization.  Maximizing gain and minimizing risk are two sides of the same coin.

The risk management practices of industry leaders deserve attention. Here are some of the top practices:

1. Risk Management is Integral to the Strategic Plan

The most important thing effective leaders do to manage risks is to make it an explicit part of the strategic plan, and demand buy in from all levels of the organization. Risk management becomes a systematic effort that is pervasive through all operating units, from sales to marketing, supply management to manufacturing, and internal controls. It is given a priority commensurate with its importance, right in line with market expansion or critical support functions. All these functions are explicitly targeted for investment and effort.

To get and retain the visibility it deserves, industry leading organizations assign responsibility for risk management to a C-suite manager, and make it part of that role’s evaluation. In order for the risk management function to matter to an organization, it has to matter to someone whose job is defined by it. This helps to ensure that there is accountability for the performance of risk mitigation tactics and consistency in implementation.

2. Risk Management is a Planned Activity

Good leaders understand that the key to success is channeling the efforts and resources of every unit in the organization to the achievement of its strategic objectives. They use the strategic planning process to define measureable outcomes, but also to communicate organizational priorities to every level. This general approach has to be adapted to the risk management function.

At the highest level, the person in the role responsible for risk management has to initiate the process of defining risk mitigation objectives. This is based on a thorough, objective risk assessment process that occurs in every operating unit. Although the details will vary depending on the organization, there are some basic concepts that are common to all organizations:

Internal controls have to be reviewed for their risk exposure and ability to mitigate those risks. Obvious places for control reviews are in financial, accounting, and IT functions, but these functions permeate the organization from sales to C-suite. … Continue reading

What Your Risk Management Strategy Says About Your Company

By Mark Lowers,

Your risk management strategy sends signals to internal stakeholders, customers, partners, investors, the public at large, and sometimes a courtroom about what’s important to your organization.

A visible, well-designed risk management plan tells people that you are serious about managing the organization to protect what’s important and minimize losses.

Think of it this way. You would always expect someone like a potential partner or customer to evaluate your organization to determine how well it can deliver its promised goods and services. You would expect them to measure the opportunity you offer against alternatives in the same market.

The flip side of that ability to produce an outcome (i.e. promised goods and services) is the ability to minimize the threats against it, or in our parlance, to mitigate the risks. To anyone who is looking at your organization closely to decide whether to work with you or not, your strategy to mitigate risk is an integral part of the whole picture. An organization with a strong risk management strategy is a better partner or supplier, more trustworthy, and more likely to deliver on its promises.

How do People See Your Risk Management Strategy?

There are a number of ways people see your risk management strategy in their interactions with your organization. Here are a few of the important ones:

Contract negotiations

If your contracts are tight and include identification of risks and steps to mitigate them, your potential partner or customer gains confidence in both the process and the probable outcome. Most contracts these days go through a legal review that will insert typical clauses about liabilities. But going beyond the usual to identify risks to the partnership the contract represents, e.g., a third-party vendor, strengthens the impression of your organization.


You probably try to establish beneficial partnerships with suppliers, distributors, shippers and others whose cooperation helps to get your product to market. These partners will learn about your risk management strategy in how you set up joint processes to minimize threats. They will also understand that they are under scrutiny as potential risks as well.

Customers and prospects

If you are transparent in identifying the potential risks in a transaction and how you will address them, your customers will gain confidence that you know what you are doing. You will be seen as a reliable vendor.

Hiring process

Careful screening of candidates and employees sends a message to prospective applicants, fellow employees, and the public about your desire to create a safe and productive workplace. Lacking a defined employment screening process can leave you open to attracting candidates who are specifically looking to bypass such potential hiring barriers.


Your insurance company may require a risk management plan, or specific risk mitigation tactics, before issuing a policy. However, beyond that, the quality of your risk management strategy could earn you more flexible underwriting and possibly even a better rate. Insurers understand risk!


Your peers in your market know your business almost as well as you do. Your reputation with them is an important asset, and how you manage risk will be part of it.

Ultimately, it’s a matter of trust. A risk managed business or organization is simply more reliable.