Challenges - Periodic Reviews
Periodic Reviews Are Frequently Overdue.
Many Financial Institutions are unable to complete Periodic Reviews within the required timeframe. Reviews exceed their scheduled next review date, creating backlogs that sit above internal risk thresholds and regulatory expectations.
This is a persistent issue, not a temporary spike. Even where remediation programmes are introduced, backlogs often return.
What is happening in practice
In practice:
Reviews are completed late or not at all
Work accumulates faster than it is resolved
Client outreach extends beyond planned timelines
Teams remain fully utilised, yet output does not meet demand
The result is a growing gap between required and actual completion.
Why this matters
This creates multiple pressures:
Increased regulatory and audit scrutiny
Reduced confidence in client risk data
Operational strain and rising cost
Trade-offs between control and throughput
This is often treated as a capacity or efficiency issue.
In reality, it reflects a deeper problem in how Periodic Reviews are structured and managed.
The Challenge
Why banks struggle to stay on top of Periodic Reviews
Periodic Reviews (PRs) are intended to ensure that client risk profiles remain accurate and aligned to current policy. In practice, many Financial Institutions are unable to complete reviews by their scheduled next review date, leading to backlogs that exceed risk appetite.
This is not primarily a regulatory or policy problem.
It is an operational system problem.
PRs typically follow defined cycles (e.g. 1, 3, and 5 years) with a limited execution window (often 90 days). While this creates a predictable schedule, institutions consistently fall behind because the underlying operating model is not designed to handle the nature of the work.
What Makes Periodic Reviews Difficult
Time-Bound Demand with Fixed Capacity
Periodic Reviews must be completed by a specific date. Demand is known in advance, but capacity is relatively fixed.
Without active management, work accumulates unevenly, creating backlogs and overdue reviews.
2. Dependence on Client Responsiveness
A significant portion of the review depends on information provided by the client.
This introduces:
Uncertainty in timing
Delays outside institutional control
Variability in completion rates
The client response window is often the longest and least predictable part of the process.
3. Work Defined as Re-Onboarding
Periodic Reviews are frequently treated as full re-onboarding exercises rather than targeted updates.
This results in:
Unnecessary work
Increased client burden
Slower turnaround times
The more that is requested from the client, the greater the reliance on timely response.
4. High Variability in Case Complexity
No two clients are the same. Reviews vary significantly based on:
Ownership structures
Jurisdictions
Products and relationships
This variability makes standardised processing assumptions unreliable and disrupts planning.
5. Lack of Flow Control
Work is often started faster than it is completed.
This leads to:
High volumes of work-in-progress
Increased cycle times
Missed deadlines
The issue is not intake volume, but the rate at which cases progress and complete.
6. Misalignment of Demand and Capacity
Even with known review cycles, demand is rarely smoothed.
Peaks in workload overwhelm capacity, while quieter periods are underutilised. Over time, this creates a structural backlog.
7. Inefficient Information Sourcing
Institutions often default to requesting information from clients, even when it could be obtained elsewhere.
This creates unnecessary dependency on client timelines and increases the risk of delay.
8. Limited Exit and Escalation Paths
Not all reviews can be completed within the required timeframe.
Without clear mechanisms for:
Offboarding
Deferrals
Exceptions
cases remain open until they become overdue.
How to Solve the Problem
Periodic Reviews cannot be fixed by incremental process improvements alone.
They require the system to be redesigned around time, flow, and variability.
The solution is not to address every issue at once, but to stabilise the system in a defined sequence.
1. Control Time
Establish a stable, achievable review schedule
The starting point is to ensure that demand can be met within available capacity.
This requires:
Smoothing PR demand across the year
Defining a steady release of cases into the system
Aligning intake with completion capacity
Building buffer to absorb delays
Without this, backlogs are inevitable regardless of process quality.
2. Control Flow
Ensure work progresses and completes at a steady rate
Once demand is stabilised, the focus shifts to how work moves through the system.
Key disciplines:
Limit work-in-progress
Prioritise completion over starting new work
Actively manage case ageing
Use case management to control daily priorities
The objective is consistent throughput, not maximum activity.
3. Manage Variability
Handle simple and complex cases differently
Periodic Reviews vary significantly in complexity. Treating all cases the same reduces efficiency.
A structured approach includes:
Segmenting cases by complexity
Allocating capacity accordingly
Creating differentiated handling paths
This improves predictability and protects flow.
4. Redefine the Work
Shift from re-onboarding to targeted update
Periodic Reviews should not replicate onboarding.
Instead:
Focus on what has changed since the last review
Apply risk-based refresh principles
Minimise unnecessary data collection
Reducing effort per case increases overall system capacity.
5. Optimise Client Interaction
Reduce dependency on client response
Client responsiveness is inherently variable and must be actively managed.
Effective approaches include:
Using public or paid data sources where appropriate
Limiting client requests to essential information
Managing outreach timelines and follow-ups
The aim is to reduce reliance on external response wherever possible.
6. Enable Structured Exit
Provide clear paths for cases that cannot complete
Not all reviews will be completed within the required timeframe.
The system must support:
Early identification of at-risk cases
Defined escalation points
Offboarding decisions with sufficient lead time
Controlled use of deferrals and exceptions
This prevents cases from becoming overdue without resolution.
7. Maintain Alignment Over Time
Continuously balance demand and capacity
Once stabilised, the system must be actively maintained.
This involves:
Monitoring throughput and cycle times
Adjusting release rates as demand changes
Rebalancing capacity across teams
Refining segmentation and handling models
The goal is a system that remains stable without periodic remediation.
The Outcome
When designed in this way, Periodic Reviews become:
Predictable in delivery
Controlled in volume
Efficient in execution
Aligned to risk requirements
Key Principle
Periodic Reviews are solved by designing for flow, not by increasing effort.
The Underlying Issue
Periodic Reviews are not failing because the work is too complex or the standards are too high.
They are failing because they are managed as a process, rather than designed as a system.
Periodic Reviews are a time-bound, capacity-constrained flow problem with external dependencies. Demand is predictable, capacity is limited, work is variable, and progress depends on client responsiveness.
Without managing these dynamics, overdue reviews are not an exception—they are inevitable.