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ERIAN – Electronic Risk Analysis

During the 2004-2005 timeframe, a system was developed at the Customs Administration of the Czech Republic within the context of the PHARE programme for performing the on-line risk analysis of the customs declarations being processed – the ERIAN system. KOMIX, an important player in the information technology field, was selected by means of a public tender to deliver this complete unique system. The main objective of the new system was to replace the existing outdated semi-automated local system of “blocking tables”, the functionality of which was limited, with a new centralised system that offers more flexibility for specifying the risks that are being examined and is more efficient from the perspective of capacity and operations. The selected solution was conceived as a versatile expert real-time system that provides a knowledge base that can be fully administered by the users. When compared with the other member states of the European Union, with its implementation of the ERIAN system the Czech Republic became one of the few countries that have a modern, full-value, automated electronic risk analysis system.

Client:

Generální ředitelství cel

Motivation and requirements

On average, the developed system processes approximately ten to fifteen thousand declarations every twenty-four hours, of which 80% are processed within a period of six hours. During peak load hours, this corresponds to approximately thirty declarations every minute. As the Customs Information System is dependent on speedy interactions with traders, the system architecture had to be designed in a way that makes it possible to evaluate incoming declarations in relation to their complexity within only a few seconds.

The architectural design also had to factor in the fact that the volume of the analysed documents will significantly increase in the future, primarily due to the planned inclusion of the system in the processing for different types of agendas. One of the most important requirements, if not the mainstay requirement, for the new system was that it must be as open as possible with regard to the administration, maintenance, and expanding volume of a priori information that is used to analyse the documents. That is to say, it must allow users to be able to change and adjust the a priori information very easily and without the need for any additional programming. Another equally important reason why the users must be able to administer the a priori information is that the individuals who have the knowledge of suspicious activity patterns are experts from the ranks of the users and not the developers. Last, but not least, the risk behaviour models and their descriptions are the most valuable and most confidential information contained in the entire system and it is therefore desirable that it is known to as few people as possible.

As was already stated above, the ERIAN system primarily performs the electronic risk analysis of the customs declarations that are being processed. It is not, however, limited to pure on-line analysis, i.e. on an analysis performed solely on the basis of static a priori information, or risk profiles. In order to partially eliminate the main disadvantages of pure on-line analysis (primarily the inability to discover new risk behaviour models), the ERIAN system introduces the integration of pure on-line analysis with off-line analysis. This extends the capabilities offered by on-line analysis to include the ability to automatically adapt to the consistently changing characteristics of the real world and risk behaviours.

Architecture

The transaction is immediately initiated at the time the declarant submits the customs declaration, the system or the customs officer accepts this declaration, and the application sends it in XML format to the risk evaluation module. The ERIAN system is centralised, that is to say all accepted declarations are sent for evaluation to a central location and a reply is then sent back, once again in XML format.

The risk evaluation is performed using the risk profiles that have been input into the system. There are two types of risk profiles in the ERIAN system, specifically:

  • Tactical (or blocking) profiles; and
  • Strategic profiles.

The aim of the tactical profiles is to identify a relatively simple specific model risk situation as easily as possible, typically by means of a request to halt or inspect the pending consignment, etc. The strategic profiles have a different objective, characteristics, and supporting philosophy. As compared to the tactical profiles, whose purpose is based on simplicity, the tactical profiles provide their author with complete freedom and a wide selection of tools that make it possible to define even very complex risk situation models.

As opposed to the creation of tactical profiles, strategic profiles require highly knowledgeable authors, who must be completely familiar with the subject matter of the modelled situation and must also have a certain level of experience with algorithms. The strategic profiles provide a general development environment with the ability to use both imperative as well as declarative programming as required. Particularly the declarative programming provides a very powerful tool for formalising the required model without the need to imperatively define the evaluation process. If required, the strategic profile may also contain a series of complicated algorithms.

When creating a profile, the user draws heavily from the off-line analysis of data stored in the data warehouse. Various analytical tools are provided for this purpose and, like the data warehouse itself, are not a part of the ERIAN system. A direct link exists between the data warehouse or, more specifically stated, the off-line analysis of the data contained in it, and the risk profiles in the ERIAN system in the form of the automatic calculation of external parameters for certain strategic risk profiles.

Technology used

The following technologies were used for implementing the ERIAN system:

  • Data transfer (incoming declarations and the results from the evaluation): XML
  • Profile administration: .NET 4+
  • Client application: .NET 4+
  • Critical sections: C
  • Database: MS SQL
  • The .NET and MS SQL technologies were selected by the client as a part of the brief for the project.

Further development

The ERIAN system proved to be of use not only for evaluating the risk associated with customs declarations in the Czech Republic and in Serbia. Thanks to its versatility it is also used in other areas, such as:

  • The verification of healthcare reports in the health insurance sector (VOZP);
  • Workflow management within the National Schengen Information System (Police Presidium); and
  • Optimisation of the instruments used for collecting receivables (Vostok Finance Group, Ukraine).

The potential uses for the ERIAN system were expanded even further thanks to the new ability to work with other database platforms (such as Oracle).

Conclusion

The singularity of the system lies primarily in the level to which the users are able to modify the system’s behaviour through the strategic profiles and to adapt the system to new findings and requirements without the need of any programmer intervention in the system. It is also unique with regard to the category of tools that the users have available to them in the form of the strategic profiles, the automatic expansion of the on-line analysis to include the results from off-line analyses, and, last, but not least, its processing efficiency and openness with regard to changes and to the processing of other agendas.

The ERIAN system is such a versatile tool that it is possible to implement it in other areas (such as banking, the insurance sector, healthcare, etc.) without having to make any significant changes to the system. Thanks to its high processing speed, the system is capable of handling such tasks as the repeated across-the-board scanning of an entire portfolio.