Assess Risk with Crime Data

Crime data can help financial institutions (FIs) identify and manage threats to their capital and earnings. The number and type of crimes reported in a given neighborhood can be invaluable information in an FI’s risk assessment process. 

The Direct Relationship

Offering financial services in high-crime neighborhoods without first knowing which types of crime occur most often could lead to poor return-on-investment (ROI). Financial offerings in areas that have a high rate of property crime, like burglary and larceny, but a low rate of violent crime, like robbery or assault, must be priced differently than in areas where the inverse is true. 

Higher rates of property crime will influence the pricing of various financial services in ways that are different from higher rates of violent crime. As perceived risk to a specific financial product increases, so must the sale price of said product. 

Crime Data Challenges

Crime data is a powerful tool. The challenge that many organizations face, however, is the manual and clumsy nature in which this information is acquired. 

Even though crime data is a matter of public record, it is exceptionally difficult to obtain accurate data at the zipcode level when using publicly available data due to the agency-centric nature in which this information is presented. 

Crimes are reported by individual law enforcement agencies, and in many cases there is more than one agency in a geographic area. The amount of manual work required to determine the true count and rate of crime by type in a given zip code is both cost prohibitive and time consuming.

Crime Data Demystified 

The cumbersome acquisition of crime data can be automated via the use of external data sources. 

By leveraging the Demyst ecosystem, FIs can automate the risk assessment process and make informed business decisions. Saving time, money, and resources has never been easier for FIs. 

Demyst’s plug-and-play Crime API recipe pulls everything having to do with crime in a given zip code and also provides the crime percentile at the national level as a point of comparison. 

Sign up for a free Demyst account and reduce the amount of time completing manual reviews. 

Effective risk management requires more than crime data — relying solely on crime data may result in unintentional discrimination. The inclusion of other data types will provide a more well-rounded dataset for a more accurate assessment of risk.