Emerging Customer Dynamics
Table of Contents
Use Case:
Organizations need to monitor changes in customer activity that may indicate emerging third-party, fraud, or compliance risks. A customer that suddenly becomes a significant source of revenue, resumes substantial activity after a long period of inactivity, or experiences a sharp change in transaction value or volume may warrant additional review. For example, a recently created customer that quickly becomes one of an organization’s most material customers could represent legitimate growth, but it may also signal activity that requires further due diligence.
The Emerging Customer Dynamics analytic identifies customers whose activity reflects a significant change from their previous behavior or from the activity of comparable customers. This includes new customers that quickly become material, dormant customers that return with substantial activity, and existing customers that experience a notable shift in materiality. By highlighting these emerging patterns, the analytic helps organizations identify unusual customer relationships or transaction activity that may be associated with corruption, fraud, bribery, anti-competitive conduct, or other financial integrity risks.
| Description | Identifies customers whose transaction activity reflects a significant change from historical behavior, including new customers becoming material, dormant customers becoming active again, or existing customers experiencing a notable change in materiality. |
| Domain(s) | Customer Revenue |
| Analysis Type | Indicator |
| Focus Area | Third Party Risk |
| Score Methodology | Customer activity is ranked relative to comparable customers over the historical period. Transactions inherit the customer's relative ranking for scoring. |
Default Scoring Criteria
Importance: 4 (default)
Enabled: True (default)
No rules are configured by default. Rules must be set by user.
Rule Configuration
To configure a rule for this risk analysis:
1. From the Admin page, navigate to Risk Settings > Risk Analysis Settings > Emerging Customer Dynamics (Customer Domain). Then, click Add A Rule.
2. Complete the following required rule fields:
| Rule Field | Description | Settings Options |
|---|---|---|
| Name | Name for the specific rule | Free text |
| Description | Description of the rule | Free text |
| Detection Pattern | The customer activity pattern that the rule monitors to identify emerging changes in behavior | Change in Materiality, Newly Material, or Previously Dormant now Material |
| Measurement Type | Determines whether customer activity is measured by the total transaction value or the number of transactions | Value or Volume |
| Comparison Dimension | Defines how customers are grouped for comparison when evaluating activity patterns | No Dimension, Company/Business Unit, Company Country, Subject Country, or Organizational Unit |
| Days Since Customer was Created | The minimum number of days a customer must exist before being considered by the rule | 1 to 1,095 Days |
| Observation Period in Days | The length of time over which customer activity is evaluated | 1 to 99 Days |
| Dormancy Period in Days ('Previously Dormant now Material' Only) | The period of inactivity a customer must have before being considered dormant | 1 to 1,095 Days |
| Number of Observation Periods ('Change in Materiality' Only) | The number of historical observation periods used to evaluate changes in customer activity over time | 1 to 6 period |
| Minimum Subjects in Cohort Required | The minimum number of comparable customers required to evaluate activity and generate a risk result | 1 to 100,000 Subjects |
3. Click Add A Rule Component.
4. To set a component, select a Field and Search Type from the dropdowns.
The Value field will appear after you select a Field and Search Type.
See a description of Field, Search Type and Value below:
| Field | Search Type | Value Type |
|---|---|---|
| Company | Includes OR Excludes | List is populated from customer data* |
| Company Country | Includes OR Excludes | Preset list |
| Customer (Payer) | Includes OR Excludes | List is populated from customer data* |
| Has Free of Charge Item | Includes OR Excludes | Yes/No |
| Organization Unit | Includes OR Excludes | List is populated from customer data* |
| Subject (Payer) Country | Includes OR Excludes | Preset list |
| Subject Account Group | Includes OR Excludes | List is populated from customer data* |
| Subject Classification | Includes OR Excludes | List is populated from customer data* |
| Transaction Reason | Includes OR Excludes | Preset List |
| Transaction Type | Includes OR Excludes | List is populated from customer data* |
*For values populated from customer data, value lists will not populate if data is not available.
Note: Where multiple rule components are set, they operate only in an “and” manner.
5. Click the Save Changes button at the bottom of the page to save your rule.
Exclusions
- Only transactions with the transaction type “sale” or “receivable increase” are considered in calculating the periodic values used in this risk analytic.
- Items noted as “no longer valid” are excluded from the aggregated data.