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Has the Pandemic Changed Your Risk Profile?

Karen Nearing

By: Karen Nearing, AAP, APRP, CAMS, CRCM, NCP, Director, Compliance Education

What has changed with your business account holders since the onset of the COVID-19 pandemic? Has their business model changed? Has their source of funds been altered, possibly even reduced? A change in a business status could impact an account holder’s standing within your financial institution’s risk tolerance and credit portfolio.

The ACH Rules do not prescribe exactly when you need to update your ACH Risk Assessment but Section 1.2.4 states:

A Participating DFI must:

a) Conduct, or have conducted, an assessment of the risks of it ACH activities;
b) Implement, or have implemented, a risk management program based on such an assessment; and
c) Comply with the requirements of its regulator(s) with respect to such assessment and risk management program.

So… when should you update your Risk Assessment?

After an initial Risk Assessment is completed (usually upon onboarding the client), EPCOR generally recommends the Risk Assessment be reviewed at least annually. However, if changes occur after the initial ACH Risk Assessment, you should conduct a new ACH Risk Assessment as part of the change. The types of changes that could indicate a look at the risk assessment could include:

  • New/updated product or service offered by your organization;
  • Change in account holder database such as acquiring a financial institution or their branches;
  • An event such as fraudulent activity or changes in economic status.

Most likely, the economic status for many of our account holders has changed over the past six months, including those who originate ACH transactions. This change in economic status could be from the business dealing with temporary or long term closures due to government orders, lacking the necessary supplies for their goods or services, number of employees, types of payments accepted or other natural ramifications from the events of the pandemic.

EPCOR has tools available to you to help ensure you are looking at the current picture of your account holders risk moving forward as you navigate the ‘new normal.’ If you’re running out of brainpower from this hectic year, consider having our team of accredited payments professionals conduct your ACH Risk Assessment. Book your service by emailing advisory@epcor.org. Or, if you’d rather go the DIY route, consider utilizing our ACH Risk Assessment Workbook.