How are risk scores calculated?

Customer risk is assessed and scored across five categories: basic information, screening, country, product, and channel. Each category has its own risk score, which is then weighted and added together to create an overall customer risk score.

For more information about any of the concepts in this article, read the Introduction to risk models and scores.

Calculating an overall risk score

Your customer's overall risk score is the sum of their score in each of the five risk categories.

You can weight any of the categories so that it contributes more or less to the overall score. Consider this carefully because the weighted score determines the risk level assigned to the customer based on the thresholds in your risk model. The default weight is 1. 

The calculation is as follows:

Overall score = A x Basic Info + B x Screening + C x Country + D x Product + E x Channel

The values A to E are the configurable weights. 

Calculating category risk scores

Categories have attributes within them. Attributes have parameters. Each parameter has a score.

Category scores are calculated from the sum of all parameter scores. Sometimes a customer may have more than one parameter for an attribute, for example someone with dual nationality. In these cases, the model will use the highest scoring (most risky) parameter for that attribute.

The score is then mapped to the category risk level that you have set in that category.

Category risk: a worked example

Here, you can see how the Country risk category has been set up to assess a customer's country of birth and country of residence.

As well as specifying which risk attributes are checked for this category, you will also have to set the thresholds that map the category risk score to a risk level.

Below are the results for three customer checks:

Mesh checks across two country attributes (country of birth and country of residence) and returns a number of different parameters (United Kingdom, United States, and France), which are then scored.

All the parameters for the category are added together to create a Country category risk score.

Using the category level thresholds you have set, the Country risk score also generates a Country risk level.