Study Guide

Customs use of risk management 

Customs compliance management is based on risk management. It directs resources to areas that may affect Customs objectives and improves efficiency. Agencies use risk assessment and selectivity to identify likely breaches of the law. 

Risk management can be applied in manual or automated environments, but automated systems are far more effective: 

The Revised Kyoto Convention requires systematic risk management, with modern systems such as ASYCUDA World supporting its practical application. 

DPDHL use of Risk Management 

Like Customs, DPDHL does not want its network to be used by dishonest customers. The use of risk management, including risk profiles, is therefore equally relevant to DPDHL operations as it is to Customs activities. 

A profile should be thought of as a tool that can provide a 'picture' of a non-compliant trader, undervalued consignment, smuggling method, and so on. Many non-compliant shipments have common characteristics, and looking for these characteristics makes it more likely that high-risk consignments or customers will be identified. 

Profiles, when properly developed and used, are very effective in identifying potential non-compliance. To remain effective, however, profiles must be continually updated as new information becomes available. Profiles should not be regarded as totally effective — many seizures of illegal contraband have been made that do not fit any established profile. 

Generally, high-risk situations usually involve several indicators. The more indicators present, the higher the risk. Risk management relies on selectivity, profiling, and targeting. Selection criteria for dutiable goods include the parties' histories, the goods' origin and route, and any applicable restrictions. 

Risk indicators are specified selectivity criteria such as: specific commodity code, country of origin, country whence consigned, licensing indicator, value, trader, level of compliance, type of means of transport, purpose of the stay in the Customs territory, financial consequences, or financial situation of the trader/person. 

Risk profiling is the means by which Customs puts risk management into practice. It replaces random examination of documents and goods with a planned and targeted working method, making maximum use of Customs resources. A risk profile should contain: 

Once established, the profiles along with other information and intelligence will provide a basis for targeting potentially high-risk movements of consignments, means of transport, or travelers. 

In the following pages we examine three case studies on the use of risk management. They show that proper risk management can make for a much more cooperative and effective compliance process.