Adverse Media Screening: White Noise vs True Risks

Today, I had a great and very nerdy discussion regarding Adverse Media with our Financial Crime Prevention Services Team ❤️.

It was about how to handle different scenarios of adverse media hits and when to involve our customers in the true positive hit since we always will make sure that the outcome of our managed service provides value for our customers.

It was a good opportunity to remind ourselves of the reason for companies perform adverse media and all the dilemmas that the knowledge from adverse media screening provides.

As I see it, the main goal of adverse media is to identify and assess well-known adverse media about a counterparty. Adverse media can’t help you identify risks that have not yet been identified by the public.

One of the challenges with Adverse Media Screening is that even if a true match is identified, the article is often not negative for our client; we call it “white noise.” This could be articles where, e.g., the matched entity is the victim of a crime or maybe even the positive part of an adverse media. It is still a true positive, but it will not have a negative impact on our customer's risk, and therefore, we do not want to involve them.

Some other types of adverse media are more in the grey zone. For example, if a counterparty is in an active trial but not yet convicted or maybe even has won a trial, will that be useful for a customer to know, and will it impact the customer's risk scoring of the counterparty? I would say it depends on the reason for the trial and the risk appetite of the customer.

An Internal discussion like the one we had today helps us understand the issues and dilemmas.

Most importantly, it helps us have the right discussions with our customers and ensure we follow their needs and risk profiles.

I have helped many customers understand their risks and create procedures for the screening process. You are welcome to contact me if you want to hear what we can help with or if you just want to discuss adverse media. I do love a good, nerdy discussion!