Redesigning Risk Assessment:

Improving our Surveillance Program

Part of regulating the American financial markets is overseeing over 4,000 member firms and 650,000 registered representatives. Over the past 5 years, Member Regulation has been improving their risk based approach. What does that mean? With only so much time and resources, we wanted to have a program that focused on the risks that each firm specifically presents to the market and to investors.

This move required a change in our regulatory approach. Instead of evaluating concerns one at a time, in isolation, Regulatory Coordinators will now consider risk at each of their firms more holistically. While Regulatory Coordinators had always taken anecdotal notes and gathered ad hoc data from firms, FINRA wanted to take advantage of technology and shift to a more data driven approach. This would help Coordinators work more efficiently and more standardized decision making. “We wanted” James Price, Senior Vice President, explained, “to enable new business process and share data and information that we never had before.”

Collaborating to turn strategy into product

To get started, the Surveillance Workspace product team needed to understand the program at a fundamental level. The team asked questions such as: How does Member Regulation define surveillance? How should it measure these risks? What information does it need to make decisions? These questions helped the team to understand the business processes and thus the technical requirements.

In addition to talking with experts, the product team watched how business users worked. This meant hours spent at FINRA offices around the country. The team spent this time on observing because, “until you see their process, there can be confusion on what the process is and how to support it,” Lisa Ortmayer, the product manager, explained.

This experience allowed the design and technical teams to quickly create pilot functionality for business users to test. In addition to user feedback, they incorporated UX testing, including A/B testing. This facilitated an agile and iterative process. By using every tool at their disposal, they mapped out a workspace best suited to how the users actually worked. In the end, they were able to create tools for the users to monitor firms and assess risk.

Visualizing the data

Having a close working relationship with business users allowed the product and technical teams to find new solutions for the Surveillance Workspace. They saw that Regulatory Coordinators had to make sense of a lot of data. More than merely hosting the data, they saw an opportunity to help Coordinators make sense of it by creating data visualizations.

They found these answers by asking questions of subject matter experts: What trends best signify an aggravated risk profile? What combinations of data tell the most effective story about how a firm behaves? The answers helped them clarify what data was important and how to display and interact with it.

Moving forward step by step

This process took several iterations, spanning three years of development. The feedback was transformative, helping create a radically different workspace from the original concept.

This process allowed the team to create truly useful tools. One of these was the Firm Notebook. The team had worked with Coordinators across the country and saw a pattern: many of them didn’t have a system to capture their notes or thoughts. Instead, they kept their notes offline using different methods, making it difficult to reconstruct the thought process for a risk assessment. This also made it difficult to share information with other members of the Surveillance team.

That’s when the idea of a Firm Notebook came up. It would allow Regulatory Coordinators to put their notes inside the new Surveillance Workspace. It became the space where this information could be stored for each member firm, improving context over time. The Notebook also helps users sort through this information with filters, sorting, flags, and tags functionality. Investing this much time allowed the team to create a product with a great user experience for coordinators around the country.

Surveillance Workspace today

Today, the Surveillance Workspace is live for 175 users. It brings together the latest information related to risk for over 4,000 firms which we regulate. Data comes from various sources, including financial feeds, firm filings, and internal FINRA analysis. What was once disparate is now all in the same place, a huge help to the surveillance staff.

More than a repository, the Surveillance Workspace puts this information in the language of risk and provides context. Previously, Regulatory Coordinators would receive alerts without any context. The new system allows users to see more information in one place. It helps Coordinators make decisions based on a larger story of information, not a single moment in time.

The Surveillance Workspace has successfully launched, but their work hasn’t stopped. Technology and Member Regulation teams continue to work together to improve the surveillance program. Some ideas are small tweaks such as improving the information coming into the Surveillance Workspace. Larger ideas are also on the table, including integration with the Exam Workspace.