I have just highlighted to a friend a matter that frustrates me to no end……I’ll now share this matter with you.

Simply thinking about risk as HIGH or not, is too limited.  The reality is, RISK cannot always be equal when simply being categorised as Low, Medium or High.

When looking at HIGH – what must be appreciated is that the HIGH-ER risks (ENHANCED RISKS as I would call them) a firm has, will vary in regard to the impact and probability.  Understanding this escalating/increasing variance (gets bigger!!!) will then help firms determine the amount of EDD to undertake to determine their residual risk.

For those of you in Jersey you will recognise these ER – RISK REQUIREMENTS (well I hope you do!!) but for those overseas (to Jersey!!) that are told by regulators (e.g. UK, Guernsey etc.) to do EDD when they have a high risk think about the more nuanced ESCALATING HIGH-ER risk approach.