The benefits of risk-based decision making

The benefits of risk-based decision making

The benefits of risk-based decision making Risk. It’s an inescapable factor that must be considered when you operate in the B2B lending, brokerage and wider finance spheres. When it comes […]

The benefits of risk-based decision making

Risk. It’s an inescapable factor that must be considered when you operate in the B2B lending, brokerage and wider finance spheres. When it comes to onboarding your customers, being aware of the risks posed by the potential customer from a credit, operational or legal perspective is even more important.

Whenever you make a decision in your business, assessing risk is important, but making risk-based decisions accurately, efficiently and economically can be difficult without the right tools. In this article we’ll look into why risk-based decisioning is so important and the tools available to help you perform it to the highest possible standard.

What is risk-based decision making?

For the B2B lending, brokerage and finance market, risk-based decision making simply refers to the process of assessing and evaluating the risks associated with providing financial services and using this information to make informed decisions.

In practice, risk-based decisioning can take many forms.

Depending on the industry a business operates in, different aspects of a potential client’s financial status will be more important. Overall, however, we can narrow down the risks faced by those operating in the financial services industry as:

 

Credit risk

For a business offering credit or loans to other businesses, the biggest risk is the prospect of non-payment or default. Therefore, assessing the creditworthiness of a potential borrower is a crucial aspect of risk mitigation.

Market risk

B2B brokerage and lending are often somewhat beholden to, or at least influenced by, market conditions and broader economic factors. From changes in interest rates and currency exchanges to simple market fluctuations, understanding the market and making informed decisions is essential to operating successfully.

Legal risk

The finance space is riddled with legal and regulatory bodies and restrictions, so it’s incredibly important for any lender, broker, or other B2B finance entity to understand and follow all laws and regulations. Being aware of the risk involved if these rules and regulations are not adhered to is essential to business success.

 

When making decisions based on the above risk assessments, your business is far more likely to reap the benefits that performing well in the B2B finance space can offer. 

However, despite the importance of risk-based decision making in B2B finance, it can be an incredibly time-consuming and resource-intensive process. Assessing every potential risk for every potential client by scanning through bank statements, credit histories and Companies House data can take hours of your time and actually prevent your business from growing.

Fortunately, thanks to recent developments in the automation industry, the technology available to allow businesses to automate their risk-based decisioning is better than ever.

Risk-based decision engines

Risk-based decision engine software may be the answer for companies who struggle to accurately and efficiently assess the potential risks posed by incoming leads during their onboarding process. 

A decision engine allows users to input all of the necessary client information into a digital application that can then automate all or part of the decision making process. Depending on the specific criteria unique to each business, this could involve prioritising credit risks, market risks, legal risks or another type of risk. Whatever the case, bespoke decisioning software is fully adaptable and allows businesses to make immediate, accurate risk-based decisions in seconds.

So, what are the benefits of automated risk-based decisioning? 

The benefits of automated risk-based decision making

While the benefits of using decision engines are incredibly wide-ranging and will be unique to every business, they can often be summed up into two primary spheres: efficiency and accuracy.

From an efficiency standpoint, automating your risk-based decision making ensures that your business can evaluate and onboard more customers than ever before. Depending on the level of autonomy you wish to give to the decision engine, you can automate over 90% of the onboarding process through risk-based decisioning. Everything from document submission and analysis to unique question-based assessment forms can be filled in, assessed and approved or denied by an automated decision engine. Many decision engines, including our own SalesTech engine, are totally bespoke, allowing them to instantly score inbound leads against any specific criteria almost instantly.

In regards to accuracy, automating your risk-based decision making process removes any possibility of human error. Once your decision engine is set up and running to your specifications, the automation technology ensures any assessments – whether that be of credit data, financial history, company structure, or anything else – are as accurate as possible.

With such a high degree of both efficiency and accuracy, one of the primary benefits of utilising a risk-based decision engine is that you can actually spend time where it matters most. Rather than wasting hours assessing potential risks yourself, you can instead focus on making face-to-face connections with potential customers or growing your business, at no major increase in cost or headcount.

Risk-based decision automation with SalesTech

Have you started your automation journey yet?

If risk assessment is essential to your onboarding process and you haven’t tried automation technology yet, there’s no better time than right now.

Our SalesTech automation and decision engine is built with B2B lenders, brokers and other finance professionals in mind. With a fully customisable decision engine at your disposal, SalesTech is integrated into all of your existing processes to increase the accuracy and efficiency of your lead scoring, due diligence, and onboarding process to ensure you work with only the best leads.

To find out more about how SalesTech can benefit your business, get in touch with us today and our product specialists will be happy to give you a walkthrough.

 

Check Company Directors

Enter a company name and get a free detailed business report
including directors data.