Nomura Research Institute, Ltd and Behavox Ltd today announced a partnership to provide Japanese financial institutions with solution services aimed at enhancing conduct risk management.
Conduct risk is defined as “a risk that, while not regulated by laws and regulations, could lead to acts against social norms, acts against business and market practices, or acts that lack a user’s perspective, thereby significantly damaging corporate value.” For example, financial institutions may be subject to administrative disposition for selling financial products that are difficult for customers to understand correctly, or for charging fees that the customer agrees to but for which the calculation basis is unclear.
Moreover, various acts of harassment are also considered to be typical examples of conduct risk.
Conventionally, financial institutions have developed a risk management framework from the perspective of compliance with laws and regulations. However, that framework alone is insufficient to identify and grasp conduct risks that require new approaches, calling for more sophisticated risk management frameworks. Additionally, the recent increase in remote work has made accurate identification of conduct risk more difficult.
Behavox is developing solutions to detect such conduct risks, and they have been adopted by financial institutions in the U.S. and Europe. Specifically, Behavox focuses on the fact that employee behavior, etc. is captured by digital devices. They then score the conduct risk by analyzing these enormous amounts of conduct data using artificial intelligence (AI).
In the past, conduct risk issues were mainly detected and verified ex post facto, but by utilizing the scoring results, it is possible to detect and verify such issues before or as they occur. Financial institutions in the U.S. and Europe equipped with this solution have achieved significant labor cost savings in conducting risk management in the areas of financial crime prevention and internal information leakage.
Together with Behavox, NRI will work to enhance the Japanese language analysis capabilities of this solution to improve the detection rate of conduct risk in accordance with Japanese norms, business and market practices. In addition, based on NRI’s track records in the U.S. and Europe, including Japanese financial institutions, the company plan to develop customers in the Japanese market and provide integrated services for Behavox solutions, from implementation consulting to operation support.
Erkin Adylov, CEO and Founder of Behavox, comments:
“As our mission statement is to organize and make useful all internal data on the planet, we are thrilled to be partnering with NRI to assist in creating safer, and more productive work environments by enabling Japanese organizations to identify conduct risks and make data-driven decisions.”