CLM Glossary
B
The structured way in which a Financial Institution conducts particular business with a client or entity, including the relevant products, roles, booking locations and other conditions that define the arrangement.
Business Arrangement
The ways in which a Financial Institution interacts with, depends upon, transacts with or is otherwise exposed to entities and networks in the wider business and financial system. Client relationships are one form of business participation, but not the only one.
Business Participation
C
The amount of CLM workload that can be absorbed using the available people, technology and other resources while continuing to meet required quality, control and time standards. Capacity can be increased, but is normally constrained by cost, budget and resource availability.
Capacity
A collection of related legal entities that are treated as belonging to the same wider client organisation, usually because of ownership, control or another significant relationship. A client group may contain many individual legal entities and business relationships.
Client Group
The activities required to establish a new client relationship or enable new business with an existing client. Onboarding is an important part of CLM, but represents only one stage of the wider client lifecycle.
Client Onboarding
The sequence through which a client relationship is established, maintained, reviewed, changed and ultimately closed. Within CLM, the lifecycle provides a mechanism for keeping the organisation's understanding of the client relationship current over time.
Client Lifecycle
The business relationship between a Financial Institution and a client. A client relationship may involve several legal entities, products, roles, booking locations and jurisdictions and therefore does not necessarily correspond to a single entity or transaction.
Client Relationship
The extent to which a control achieves the outcome it is intended to achieve in practice. Effective control requires more than having a documented control; it must operate reliably and provide sufficient confidence that the relevant risk is being managed.
Control Effectiveness
A capability whose effective operation is important to the organisation's ability to conduct business safely, maintain control and respond to change or disruption. CLM can be viewed as critical business and control infrastructure because many business activities depend upon the information, decisions and controls it provides.
Critical Infrastructure
Services or activities whose disruption could materially affect the bank, its clients, markets or the wider financial system, and which therefore need to be maintained or restored under stress.
Critical Services
D
The defined authority to make particular decisions within an organisation. Clear decision rights establish who can decide, approve or intervene and under what circumstances.
Decision Rights
A structured representation used to describe, analyse or communicate part of a design. Examples can include models, maps, architectures, principles, specifications and diagrams.
Design Artefact
The scope permitted to use judgement when deciding how a requirement should be applied, rather than following a fully prescribed rule. The amount of discretion available may be determined both by regulation and by the organisation's confidence in its own operating model.
Discretion
Complexity created by interactions between changing elements of a system rather than simply by the number of elements it contains. In CLM, this can arise as entities, relationships, events, booking locations, jurisdictions, controls and information interact and change over time.
Dynamic Complexity
E
Additional due diligence undertaken where the nature or level of risk requires greater investigation or assurance than standard due diligence would provide.
Enhanced Due Diligence
An organisational ability created through the combination of people, processes, information, governance, controls and technology. An enterprise capability can span multiple teams and functions rather than belonging to a single organisational unit.
Enterprise Capability
The organisation's overall participation in the wider business, financial and economic environment through clients, counterparties, issuers, investments, markets, infrastructure and other relationships or dependencies.
Enterprise Participation
A distinct party about which the organisation needs to maintain identity, relationship or business information. Depending on the context, an entity may be a legal entity, person or another recognised organisational structure.
Entity
Entity-Role-Relationship Structure
A connected representation of entities, the roles they perform and the relationships between them. It provides a structure through which business activity, obligations, permissions and exposures can be associated with the correct entities and relationships.
The potential effect on the organisation arising from its relationship with, position in, or dependency upon an entity or activity. Exposure can take many forms, including credit, liquidity, operational, regulatory and financial crime risk.
Exposure
A connected, institution-wide view that brings together relevant information across businesses, legal entities, clients, products, jurisdictions, systems and risk domains rather than relying on fragmented individual views.
Enterprise View
F
An organisation that provides financial services or participates in financial markets. On this website the term is used more broadly than "bank" where the CLM concepts may also apply to other types of financial institution.
Financial Institution
I
A value used to identify, reference or link an entity, relationship, account or other business object within or between systems. Effective identifier management helps information about the same entity or relationship remain connected across the organisation.
Identifier
The extent to which clients, entities, products, markets, systems, processes and other dependencies are linked, allowing an event or change in one area to create consequences elsewhere.
Interconnectedness
An entity that issues financial instruments such as bonds, notes or other securities. An issuer may also be a client, but the issuer role can exist independently of a direct client relationship.
Issuer
J
A country or other legal or regulatory territory within which particular laws, regulations or authorities apply. A client relationship may involve multiple jurisdictions.
Jurisdiction
L
An organisation or other body recognised in law as having its own legal identity. The legal entity provides an important anchor for understanding ownership, relationships, obligations, business activity and exposure.
Legal Entity
A structured representation of the ownership or control relationships connecting legal entities. It enables individual entities to be understood within the wider corporate or organisational structure to which they belong.
Legal Entity Hierarchy
An occurrence that may require the organisation's understanding or treatment of a client relationship to change. Examples can include ownership changes, new business, changes in risk, regulatory developments or relationship closure.
Lifecycle Event
M
A defined condition, threshold or change in performance that prompts management attention or action. A trigger may lead to closer monitoring, investigation, escalation, additional capacity, remediation or another intervention.
Management Trigger
An entity with which the organisation transacts in financial markets. A market counterparty may or may not also have a conventional client relationship with the organisation.
Market Counterparty
The significance of an event, exposure, issue or change relative to the bank’s risk, financial position, obligations, operations or strategic objectives, determining whether management attention or action is required.
Materiality
A technology approach in which different capabilities are provided by separate components that can be connected through defined interfaces, rather than being delivered through a single all-encompassing platform.
Modular Platform
O
The way an organisation arranges the people, responsibilities, processes, governance, information and technology required to deliver a capability or outcome.
Operating Model
The range within which a performance measure can normally move while the required CLM outcomes remain protected. Movement within the range may require no action, while movement towards or beyond its limits may require management attention.
Operating Range
A reliance on another system, process, data source, team, infrastructure component or third party that is necessary for an activity or service to operate effectively.
Operational Dependency
P
A scheduled reassessment of an existing client or relationship to confirm that relevant information remains current, risks remain understood and the relationship continues to meet the organisation's requirements.
Periodic Review
The business decisions and conditions that determine what activities an organisation is prepared to undertake with a client or entity. In CLM, permissions may apply to products, services, locations or other aspects of the relationship and are distinct from technology access permissions.
Permissions
The amount of CLM workload that can be completed using a given level of resources or effort while maintaining required quality and time standards. Productivity can be improved through measures such as better data, simpler processes, reduced rework, clearer responsibilities and appropriate automation.
Productivity
R
The actions and arrangements through which a bank seeks to restore its financial and operational viability following severe stress or disruption.
Recovery
Relationship Network
The connected set of entities and relationships through which organisations participate in the business and financial world. Changes affecting one part of the network may have consequences elsewhere through ownership, funding, markets, counterparties, infrastructure or other dependencies.
The ability of the CLM operating model to continue delivering required outcomes when the level, type, complexity or urgency of demand changes. In CLM this extends beyond technology availability to include people, processes, controls, data, capacity and decision making.
Resilience
A formal decision to accept a defined level of risk for a specified situation or period, usually subject to conditions, controls or review. In CLM, some deadlines are important because the associated risk has only been accepted for a defined period.
Risk Acceptance
The ability to combine and analyse risk information across clients, entities, products, businesses, jurisdictions and risk types to understand the bank’s overall risk position and concentrations.
Risk Aggregation
The nature and level of risk an organisation is prepared to accept in pursuing its objectives. Within CLM, risk appetite helps shape decisions about which relationships and activities are acceptable and the conditions under which they may proceed.
Risk Appetite
An approach in which requirements and controls are applied using judgement about the nature and level of risk, allowing the response to be proportionate to the circumstances. It depends on sufficient discretion being permitted and on the organisation being able to exercise that judgement reliably.
Risk-Based Approach
Resolution
The process through which authorities manage the failure or likely failure of a bank in a controlled manner, including maintaining critical functions and limiting wider financial-system disruption.
An approach in which requirements prescribe more specifically what must be done, leaving less scope for individual judgement. A rules-based approach may be deliberately used where greater discretion could create unacceptable inconsistency or risk.
Rules-Based Approach
S
A legal entity established for a specific and usually limited purpose, such as holding assets, financing a transaction or carrying out a particular activity. Special-purpose entities can form part of more complex client and ownership structures.
Special-Purpose Entity
Static Data
Relatively stable reference information used to identify and support clients, entities, accounts, products or transactions across operational systems. Despite the name, static data still needs to be maintained when circumstances change.
A set of interconnected elements whose interactions collectively produce an outcome. Describing CLM as a system recognises that its performance arises from the interaction of clients, entities, relationships, data, decisions, controls, people, operating models and technology rather than from any single process or platform.
System
The significance of a financial institution to the functioning and stability of the wider financial system, such that its severe distress or failure could have consequences beyond the institution itself.
Systemic Importance
T
A defined value or condition used to determine when a performance measure requires attention or action. Crossing a threshold may trigger closer monitoring, investigation, escalation or intervention, depending on the significance of the measure and the level reached.
Threshold
The degree of variation from an expected or target level that can be accepted before management action is required. Tolerances help distinguish normal performance movement from conditions that require investigation or intervention.
Tolerance
Total Entity Exposure
The organisation's combined exposure to a legal entity across the different ways in which it participates with or in relation to that entity. This may include client relationships, trading positions, investments, obligations and other forms of business participation that would otherwise be viewed separately.