Risk Management

Underwriting Automation Hits The Road


If you don’t plan your trip before hitting the road, you might get lost.

The same applies to risk teams in automating their underwriting processes. A lot of them are in a rush to do so … but those that do not first establish a framework often end up stuck in the mud.

Agreement Express has seen this happen to a lot of organizations. That’s what compelled the company to design a new guide for risk managers, compliance officers and underwriters — called “Building Your Roadmap to Underwriting Automation” — that shows how risk teams can apply a clear framework for an organized automation plan, craft a vision for the objectives therein, and map out a route to successful implementation.

Getting Started

Among the aspects of “trip planning” with regard to underwriting automation, Agreement Express states first and foremost that attempted shortcuts are not the answer, as they more than often lead to critical process errors that set organizations further back from where they started.

Beyond that, the company’s guide emphasizes the importance of scoring real values (rather than implementing a “pass/fail” system), being careful to focus on the quality of information gathered over quantity, and understanding the direct link between an effective automated underwriting process and the positivity of a customer’s onboarding experience.

Key Elements of Automating Underwriting

Getting into the nitty-gritty of implementing an automated underwriting procedure, the Agreement Express guide dives into detail on a number of key elements, including:

Statement of Intent.  Establishing a guiding principle for a merchant acquisition plan — while providing an organization’s marketing and sales team with a clear direction of who to target — also provides its risk teams with merchant applications that have a higher likelihood of fitting within a defined risk profile.

Mapping Out the Current Process.  By undertaking a comprehensive review of its existing document flow, an organization can determine which stages can and should be automated, thus increasing a consistent and defensible process moving forward.

Codifying elements.  Applying numeric values to each data point, attests Agreement Express, enables an organization to have a better understanding of its merchants than simply applying the labels of “pass,” “fail” or “monitor” to them.

Automated value scores.  As an organization begins to build in automations and data feeds, it is critical, explains the Agreement Express guide, that it tune and adjust score values to match its manual evaluations. This methodology allows for greater confidence in the risk model over time, whereas diving into full automation right away can waste money and time.

Visualizing merchant data.  Agreement Express recommends that organizations evaluate their merchants using a visual representation known as a histogram, through which they can interpret where their risk threshold sits, where merchants lie in respect to that threshold, and the volume of merchants that are being brought it relative to it. Over time, this can reduce the percentage of merchant applications that are reviewed manually.


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