Mitigate Risks with the Risk-Based Approach (RBA)

The Risk-Based Approach (RBA) is a way to organize and manage risks that your company needs to deal with so that these signals do not become legal and financial problems.

To understand this methodology and its utility, first, it is necessary to state that the most important asset for a company is its relationships.

Without your employees, for example, nothing would be produced and offered, meaning the company wouldn’t even exist. Without customers, who would you sell to? However, while these assets carry a very positive weight, they can also bring risks that can negatively impact your organization if not identified and solved with a good background check process. It is in this context that the Risk-Based Approach, also known as RBA, comes in.

This type of organization helps you understand what risks are related to third-party management (employees, partners, suppliers) and the best way to mitigate them, before they become losses.

Therefore, check below how to apply this process in your company!

Understand What the Risk-Based Approach Is to Mitigate Problems

The Risk-Based Approach, also known as RBA, is a methodology that reduces legal and financial losses such as labor lawsuits.

Also see how to reduce labor claims in your company with this process checking solution

This happens because the principle of the Risk-Based Approach (RBA) is to identify risks and organize them by priority level.

Imagine that, when analyzing a candidate’s educational history, you discover they claimed to have certifications and professional registration, but a comprehensive background check shows this is not true.

This risk can bring legal consequences, as your company would be hiring someone without the necessary qualifications.

Read also about how to check the backgrounds of people and companies in a 100% automated way

Now think of a second scenario: you didn’t perform the 8 steps of supplier approval, they are in debt and will not be able to deliver a supply.

This could stall your operation and delay orders, another relevant risk.

With RBA, you identify both risks, assess the severity of each, and define action plans according to the level of impact they can generate.

See more about how to apply this process in this material 👇

Why Use RBA in Your Company

You should use this methodology because risks need to be identified and treated in advance. Otherwise, if ignored, they cease to be just risks and become problems, and problems cost the company dearly.

An example of this is the recent case of the largest Pix scam in Brazil, which diverted more than R$ 500 million. The investigation revealed that the attack was only possible because a trusted employee of a technology supplier company gave their credentials to criminals.

If a more rigorous background check had been done, with analysis of behavioral risks, financial history, and other employee indicators, perhaps this risk would have been identified before causing a billion-dollar loss.

But How to Identify These Risks in Practice and Categorize Them?

To do this, it is important to rely on a solution that identifies risks in the history of people or companies and classifies these risks as low, medium, and high. Thus, you can organize what was found and prioritize according to the flagged level.

In this sense, BGC Brasil’s background check platform can help you access data on people or companies such as their criminal records in a 100% automated way.

Furthermore, the platform produces a complete report with what was found and flags the risk level according to your business rules.

Get to know our platform

Risk-Based Approach and Background Checks

As we have seen, the Risk-Based Approach is fundamental to identifying threats before they become problems.

But it goes further: it is also a key piece in the background check process. The two practices complement each other.

After all, the best way to anticipate problems is to investigate if there are signs of risk in the past, that is, in the backgrounds of people or companies with whom your organization intends to interact, whether as employees or suppliers.

From this perspective, solutions like the background check help analyze these histories and reduce the chance of negative surprises.

Implement the Risk-Based Approach and Reduce Costs and Penalties

Adopting the Risk-Based Approach (RBA) is a smart way to protect your organization. By identifying, classifying, and prioritizing risks in advance, you gain predictability, reduce operational losses, and avoid legal penalties that could be easily prevented.

More than a regulatory requirement, RBA should be seen as a strategic ally, both in third-party management and in hiring employees, partners, and new businesses.

And, with the support of background check solutions, your analysis process becomes even more complete and efficient.

Your company doesn’t need to wait for a problem to happen to act. Anticipate, implement RBA, and turn risk management into a competitive advantage.

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Frequently Asked Questions about the Risk-Based Approach (RBA)

1. What is the Risk-Based Approach (RBA)?

RBA is a management method that prioritizes the identification, assessment, and treatment of risks based on the impact they can generate for the company. The goal is to act preventively, concentrating efforts on the most critical risks.

2. How does RBA connect with background checks?

Background checking provides information about the history of people and companies. This data is used as a basis to identify potential risks, such as fraud, labor lawsuits, links to watchlists, among others.

3. What is the importance of background check in this context?

The background check is a process that allows assessing risk before any formal relationship with an employee, supplier, or partner. It contributes to decisions being based on concrete data, strengthening the application of RBA.

4. What types of risks can be identified with a background check?

Depending on the depth of the analysis, it is possible to identify: judicial and criminal proceedings; legal sanctions and impediments; fiscal and financial irregularities; conflicts of interest or dubious history; indications of fraud or inconsistencies in professional data.

5. Is RBA only for regulated areas like compliance and legal?

No. The Risk-Based Approach can (and should) be applied by any area that makes decisions with strategic impact such as HR, procurement, and finance. Whenever there is hiring or relationship with third parties, RBA can help mitigate risks.

6. How does risk classification help in decision making?

With classification, your company can prioritize the most severe and urgent risks. This avoids the dispersion of resources and enables more assertive actions, such as deepening the analysis of certain candidates, renegotiating with suppliers, or terminating risky partnerships.