Risk scoring tool first introduction - Europa

Regional Policy and Employment Policy

ARACHNE PROJECT Risk scoring tool

first introduction

Ljubljana 22 October 2014


Arachne Risk Scoring Tool – extraordinary program representing state of the art

Part I General introduction

State of the play, who applies ARACHNE? Understanding the basic concept of ARACHNE Added value for the managing authority Data protection

Part II Live presentation

Main functionalities Risk identification Examples of some results of the analysis


Introduction –Part 1-

1.0 Brief introduction

2.0 Why it is recommended to use ARACHNE

Who is applying ARACHNE already

3.0 Who provides data and how are they processed?

4.0 Basic risk concept and risk categories

1) 5.0 Main functionalities and dataprotection


2.1 Why is ARACHNE Risk scoring Tool recommended?

Support the Management and Control Systems of the OPs, strengthen fraud prevention and detection and finally to lower the error rate and

Facilitate the continuous monitoring / overview of the internal and external data regarding projects, beneficiaries and contracts/contractors


• 11 MS have sent data file:

8 have access to Arachne Acceptance (IT, GR, PT, CZ, RO, LV, HR, PL)

3 will soon get Arachne (HU, BE, DK)

• 4 are finalising their data file (BG, MT, SK, CY)

• 4 are in 'reflexion' phase

(SE, DE, ES, FR)

2.2 Integration In Member States


2.3 Who should have access to ARACHNE ?

Managing Authorities are at the first place !


3.0 Data Flow

Member States

Operational Data

DIGIT

Operational Data

SFC2007

Vadis

Operational Data

Orbis World Compliance

GET database

GET database

GET Application

Server

Member States

European Commission


3.1 Orbis Database • Orbis has information on :

Companies : +/- 100 million companies worldwide

• Financial data of the company (turnover, shareholders, …)

• Address information

• Related people (directors, contact people, …)

• Indicators like credibility and bankruptcy

Persons : +/- 100 million persons

• First name, last name, Age

• Number of affinities, number of companies and role in company

• The data is collected from publicly available information such as official annual reports or balance sheets submitted to regulatory bodies

• The level of details available in the database varies by country and company size

• All data available in Arachne


3.2 World Compliance

• World Compliance collects, aggregates and centralizes : • PEP lists (politically exposed person) including family members

• Sanctions lists (EU Terrorism List, ICE List, CBI List, …)

• Global enforcement list (narcotic & human traffickers, money launderers, fraudsters and other criminals, …)

• Adverse media list (company or person that have been linked to illicit activities by news sources)

• The data is received from regulatory and governmental authorities (except for adverse media list)

• Information is only accessible through the Arachne alert details (It won’t be possible for a user to explicitly retrieve these information for a given company/person)


4.0 Basic risk concept

First action : verify!

Interpret professionally

Act and report


4.1 Risk categories and alerts

Risk category Description

1. Procurement Risk indicators on the procurement process

2. Contract management Assessment of contract management aspects of the project and comparison to the peer group

3. Eligibility Verification of the eligibility period and existence of contractors and subcontractors

4. Performance Assessment of the coherence of activity sector ratios with the benchmark values

5. Concentration Cross-project and cross-operational program checks

6. Other Basic checks on logicality and reasonability of project data

7. Reputational and fraud alerts

Financial: Overall financial performance of beneficiaries, contractors / suppliers and sub-contractors, based on financial reporting data

Relationship: Existence of relationships between beneficiaries and contractors / suppliers or sub-contractors and their respective personnel

Reputation: Involvement in activities (such as bankruptcies) that could possibly result in reputational damages

Sanction: Identification of beneficiaries, contractors/suppliers, subcontractors or their respective personnel, blacklisted of appearing in any type of sanction list

Change: Any type of changes to the company structure


5.0 Main functionalities of Arachne Internal data upload from Member States

External data enrichment (Orbis, WorldCompliance)

Risk score calculation based on internal and external data

Output visualisation in dashboards

High risk beneficiaries / projects / contractors / contracts

Drill-down functionalities

Visualisation of links between entities/individuals

Scenario analysis

Export options

Case management

Feedback loop

User management


5.1 Added value for the managing authority

Effective and proportionate anti-fraud measures taking into account the risks identified

Getting an understanding on risks associated with public procurement

Administrative, financial and operational capacity of beneficiaries

Support for planning on-the-spot verifications


5.2 Data protection

European Data Protection Supervisor (EPDS) issued observations Compliance with the Regulation (EC) 45/2001) • Quality and retention period of

data • Review the user management

and to give guidance to MS • Oblige users to report

inconsistencies


Thank you for your attention

for the first part of today.

Documents

Risk scoring tool first introduction - Europa