Findings Demonstrate Growing Need for AI-Enabled Risk Intelligence in Finance Sector
TEL AVIV, Israel —January 27, 2022 —Intelligo, provider of Clarity, a leading, AI-powered background risk intelligence platform for pre-investment and pre-hire due diligence, today released the results of its flagship 2022 Risk Barometer Report. The report found 3,540 moderate risks (yellow flags) or severe risks (red flags), amounting to more than half of the 6,327 total risks identified across 3,000 background check reports completed in 2021 on the Clarity platform.
The 2022 Risk Barometer incorporates three levels of risk (information flags, yellow flags, and red flags) across four risk categories: Behavioral (16.6% of total flags), Reputational (23.4%), Financial (14.2%), and Professional (35.4%). Almost two thirds of the flags (64.6 %) fell into categories that are most closely scrutinized for their seriousness during operational due diligence.
Among these categories, Financial had the highest percentage of severe risks, with almost one in eight – or 12.3% – of all flags at that highest level. Other results from the barometer included the following:
- In the Behavioral category, the most prominent flag was “Frequently Sued,” included in approximately 15% of all reports. Second and third most prominent were “Involved in a Substance Abuse Case” and “Involved in a DWI Case” at 2.41% and 1.82% of reports, respectively. While such behavior in the past certainly cannot predict future actions, it provides a glimpse into an individual’s character and can attest to their integrity.
- In the Reputational category, “Adverse Media Articles” appeared most frequently, but only 6% of those flags were deemed severe. In contrast, only 1.24% of all reports flagged a subject listed in a sanctions database, but 88.5 percent of those were severe, as they indicated engagement in illegal activities that might include terrorism or human rights violations as well as financial misdeeds meriting inclusion on sanctions lists.
- In the Financial category, about 4% of the reports flagged individuals with “significant debt.” While 3% of the reports flagged individuals involved in bankruptcy cases, 86.75% of those were categorized as severe due to the direct relevance to an individual’s financial management capabilities.
“More sophisticated technology is required to efficiently analyze a broader and deeper subset of available data in pre-investment due diligence, as evidenced by our 2022 risk barometer,” said Dana Rakovsky, Chief Research Officer of Intelligo. “High profile corporate and financial scandals all have one thing in common – the decision to commit fraud by an individual or group of people. Being aware of individuals’ background and decision-making—particularly in an age of fast-paced, often remote deal making—can have profound consequences.”
The full 2022 Risk Barometer is available for free download at: https://www.intelligo.ai/insights/risk-barometer-2022/
Intelligo’s Clarity, which includes both standard and customizable flagging methodology, is used by hundreds of leading private equity firms, funds of funds, VCs, hedge funds, investment banks, and institutional investors with a collective AUM north of $500 billion, including Starr Investment Holdings, University of Virginia Investment Management Company (UVIMCO) and Hamilton Lane to enhance pre-investment and pre-hire due diligence.
Intelligo is a leading Risk Intelligence company fusing AI and Big Data to digitalize the background check industry, enabling organizations to make secure and informed business decisions. Intelligo’s AI-powered cloud platform Clarity, allows stakeholders including investors, financial institutions, and corporations to make fast, accurate intelligence-driven decisions, providing a 360° view of a person’s or a company’s reputational, legal, and financial backgrounds, and its broader impact on trust and business risk. For more information, please visit Intelligo.ai.
Eddie de Sciora