How Risk Ratings Work in Parcha

Last updated: July 29, 2025

Risk ratings help you automatically categorize businesses and individuals as low, medium, or high risk based on the information gathered during your compliance workflows. This article explains how to set up and use Parcha's AI-powered risk rating system.

Overview

Traditional risk rating often involves complex spreadsheets with hundreds of questions that are difficult to implement and maintain. Parcha simplifies this process by allowing you to define your risk criteria in plain English, then automatically applying these rules using data collected during compliance checks.

Setting Up Risk Ratings

Step 1: Access Risk Rating Configuration

  1. Navigate to Agent Hub in your Parcha dashboard

  2. Create or select an existing AI agent

  3. Complete the agent configuration process

  4. Click on the Risk Rating section

Step 2: Define Risk Criteria

  1. Add Risk Categories: Create criteria for High, Medium, and Low risk ratings

  2. Write in Plain English: Describe what conditions should trigger each risk level

    • Example: "High risk if business operates in prohibited countries"

    • Example: "Medium risk if industry is cryptocurrency or money services"

  3. Specify Detailed Conditions: Within each category, add specific criteria that would cause an entity to receive that risk rating

How Risk Rating Works

Parcha's risk rating system analyzes all information gathered during your compliance workflow to determine the appropriate risk level:

Data Sources

The system uses data from various compliance checks, including:

  • Country verification

  • Industry verification and classification

  • Business profile building

  • Business reviews research

  • Beneficial ownership research

  • Web research on the business

Automatic Processing

When your AI agents run compliance workflows, they:

  1. Execute all pre-configured checks

  2. Collect and analyze relevant data

  3. Apply your risk rating criteria to the gathered information

  4. Generate a final risk recommendation

Viewing Risk Rating Results

Results Dashboard

After processing, you'll see:

  • A list of all businesses that have been risk-rated

  • The final risk rating for each entity (High/Medium/Low)

  • All compliance checks that were performed

Detailed Risk Reports

Click on any risk rating to access:

  • Comprehensive explanation of how the AI reached its decision

  • Specific evidence that triggered the risk rating

  • Source documentation for each piece of evidence used

Example Report Features

  • Clear reasoning for risk decisions (e.g., "This business operates in Afghanistan and Iran, which are considered high-risk countries")

  • Direct links to source checks where information was found

  • Complete audit trail for regulatory compliance

Key Benefits

Transparency

  • Every risk decision is fully explainable

  • Clear documentation for audit purposes

  • No "black box" scoring systems

Efficiency

  • Process entities in minutes instead of hours

  • Parallel processing capabilities

  • Handle hundreds or thousands of entities simultaneously

Flexibility

  • Easy to modify risk criteria at any time

  • Plain English configuration (no complex scoring formulas)

  • Adaptable to changing regulatory requirements

Best Practices

  1. Start Simple: Begin with basic risk criteria and refine over time

  2. Regular Reviews: Periodically review and update your risk criteria

  3. Document Changes: Keep records of criteria modifications for audit purposes

  4. Test Thoroughly: Run sample entities through your criteria before full deployment

Troubleshooting

Q: My risk ratings seem inconsistent A: Review your criteria for overlapping or conflicting conditions. Ensure your plain English descriptions are specific and unambiguous.

Q: Can I change risk criteria after processing entities? A: Yes, you can modify criteria at any time. Previously processed entities will retain their original ratings unless reprocessed.

Q: How do I handle edge cases? A: Add specific criteria for edge cases in plain English, or create additional risk categories if needed.

Support

For additional assistance with risk rating configuration or troubleshooting, contact our support team (support@parcha.ai) or consult the Agent Hub documentation.