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Risk Management

Risk Management. APEC Workshop: Self Certification of Origin Kuala Lumpur 11-12 October 2010. Importance of Risk Management. Covers all of our work Proactive rather than reactive Improves effectiveness and efficiency Focuses resources and preparation

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Risk Management

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  1. Risk Management APEC Workshop: Self Certification of Origin Kuala Lumpur 11-12 October 2010

  2. Importance of Risk Management • Covers all of our work • Proactive rather than reactive • Improves effectiveness and efficiency • Focuses resources and preparation • Improves business culture and accountability Risk Management underpins so much of Customs’ work

  3. Benefits of Risk Management • Better resource allocation • Increased revenue • Improved legislative compliance • Reduced release times • Lower transaction costs • Improved cooperation with business • Improved reputation and professionalism • More intelligent approach Risk Management provides numerous benefits

  4. Setting the Foundation: International Standard • Standard Methodology • Applied to any Situation • Likelihood & Consequence RISK MANAGEMENT

  5. Setting the Foundation: Policy & Approach Legislative base: Customs & Excise Act 1996 sets controls Domestic & International Co-operation: Information & compliance Co-operation with Industry: Frontline & SES - Information & compliance Systems and Culture: Concept embedded in the organisation & drives decision making RISK MANAGEMENT

  6. Practical Approaches • Pre-clearance screening & Profile development • Trade Business Rules • Audit Controls • Business Relationships RISK MANAGEMENT

  7. Pre-clearance screening • The application of known risk profiles across advance information and prior to the clearance of the goods. • risk profiles • advance information • prior to clearance • Determine low risk & other

  8. compile data from all the identified instances of attempted revenue evasion over an established period of time (it is recommended this period covers the last 12 months); • determine what focus your revenue screening process will have (e.g. will it be pure tariff-based, industry sector-based, by country of origin, etc) - this will determine what data fields are used in the break-down; • break down the information on identified revenue evasion and group it by data fields (as above); • analyse the information by data fields to identify trends, patterns, data clusters, etc. Profile Development • Tariff item • Goods description • Weight • Shipping/freight cost • VFD • Duty & GST • Unit value • Concession • Preference indicator • Relationship indicator • Country of origin • Country of export • Common fields for revenue profiles compile data from revenue evasion (eg the last 12 months); determine focus e.g. tariff-based, industry sector-based, by country of origin, etc) – this will determine data fields; break down the information & group it by data fields ; analyse the information by data fields to identify trends, patterns, data clusters, etc. RISK MANAGEMENT

  9. Trade Rules • Consistent business rules – • Add to profiles • Used for decision-making • Guide to seek further information • Examples: • First time importer • Irregular supplier • Import inconsistent with previous history • Value/weight inconsistent with declaration • VFD outside expected range • Size of shipment inconsistent with nature of shipment Alerts in system General Query to importer (pre-clearance) Database check for historical data Open source research RISK MANAGEMENT

  10. Audit Controls • Comprehensive Trade Assurance programme • Assisting compliance through rolling audits • Comprehensive audits for non-compliant • Planned sector audits (eg “appliances, chemicals”) • Aimed at promoting voluntary compliance & importer accountability Annual Programme Planned audits Feedback loops for profiles & trade rules Explained to Industry Prevent Revenue Leakage

  11. Consultation with Industry • Frontline programme – business partnership • Programmes for new importers • Education, advice & information • Information & advice on audits • Transparency – fact sheets, call centre, internet Business contributes to risk management Improves voluntary compliance – increases the number of low risk traders Increases Customs awareness of changing business practice

  12. Risk management is not risk elimination…..Review & monitor your systems & procedures regularly RISK MANAGEMENT

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