Flexible target operating models

While many financial institutions have a standard target operating model in place, it often needs more flexibility to remain truly effective in changing conditions. Flexibility requires a level of built-in adaptability, anticipation, and reactivity: as the risk landscape and regulations evolve, so too must the target operating model. 

Building a flexible target operating model requires regular review and comparisons against the financial institution’s maturity. Objectives and targets should be revisited and refreshed where necessary. For example, a firm undergoing remediation for compliance failings will have different objectives than a firm focused on operational efficiencies. 

Just as a firm’s entire anti-financial crime programme must be rooted in a risk-based approach, so should the target operating model. Flexible target operating models should be informed by the firm’s risk assessment so that it captures key risks and, like any risk assessment, is reviewed on a data-driven and regular basis. 

What are the benefits?

The benefits of a flexible target operating model are multiple and go beyond staying compliant. When a firm adjusts to meet changing risk factors, like regulatory changes or rapid increase in customer demand, a flexible target operating model should be able to identify areas where an anti-financial crime programme will be impacted or need more support in both the short and longer term. This allows management to plan ahead effectively and anticipate the areas requiring more support, whether hiring flexible support or employing technology tools.

The ability to anticipate and plan means financial institutions can be spared from costly last-minute capacity strains. Additionally, flexible target operating models can help consider how investments in technology infrastructure will serve the long-term, ensuring a better return on investment.