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2021
Talent

Staffing the Risk, Not the Balance Sheet

Community & BaaS
The Challenge

Monthly funds volume exceeded the entire asset size of the bank

The bank’s strategy centered on serving a cash-intensive, higher-risk deposit vertical. That focus gave it a risk profile far larger than its balance sheet implied. The dollar volume of funds moving through its top relationships each month exceeded the entire asset size of the bank. Operating under heightened regulatory expectations, and having recently turned over leadership in a key control function, the bank needed a staffing case that would hold up to examination, a compliance function restructured to match a high-risk business model, and a financial model capable of the stress testing its regulator expected. The engagement carried a remediation timeline.

KEY TAKEAWAY

Velocity, not asset size, is the real measure Two lessons travel well beyond this engagement. Asset size is a poor proxy for compliance burden. A small bank can carry the BSA workload of an institution many times larger when the velocity of funds through it is high. And headcount ratios mislead. An early read of the branch network flagged apparent understaffing against a simple per-branch target, until a closer look revealed other departments were cross-covering on an as-needed basis. The org chart said one thing; how the work actually flowed said another.

How the staffing case was built
  • Size control functions to transaction and risk volume, not to peer benchmarks or asset size.
  • Build staffing models from the work up, so they double as planning tools when the business changes.
  • Separate high-risk and routine compliance workstreams so one does not starve the other.
  • Treat a regulator-grade financial model and stress-testing capability as table stakes, not a special project.
  • Name your critical roles and be honest about the gaps. Leadership tested against real regulatory pressure is the hardest gap to fill.
  • Built a bottom-up staffing model from the work itself rather than from peer headcount ratios. The model counts customers and transactions, categorizes them by risk grade, assigns standard processing times to each required task, and multiplies task volume by time to derive the full-time-equivalent staff the program actually needs. Because it is driven by client and transaction counts, it doubles as a planning tool as volumes change.
  • Recommended a two-team compliance structure: a specialized team dedicated to the high-risk deposit vertical, where enhanced due diligence and transaction monitoring are most intensive, and a smaller team for routine activity. Keeping them separate prevents the high-risk workload from silently consuming the capacity meant for everything else.
  • Built a regulator-grade financial model from the bank’s system of record, on a bottom-up basis, structured so the finance team could change assumptions and run alternative and stress scenarios where no such capability had existed.
  • Reviewed the bank’s draft capital plan and proposed amendments.
  • Assessed the organization, identified critical positions and gaps, prepared job descriptions for the roles most essential to safety and soundness, and named the recruitment of experienced, regulation-tested leadership as the single most important gap to close.
THE PROCESS

Size the program to the work, not to peer headcount ratios

Endurance Advisory was engaged to assess and rebuild the program’s staffing and controls and to establish a defensible capital planning process.

What the engagement covered

Bottom-up BSA/AML staffing model, two-team compliance structure, regulator-grade financial model, capital plan review, critical-role assessment

What the bank took to examiners

BSA staffing model built from transaction volume

Outcomes

What the bank took to examiners

Staffing model built from transaction volume

The model counts customers and transactions, grades them by risk, assigns standard processing times, and derives the full-time-equivalent staff the program actually needs.

Compliance structure separated by risk

A specialized team for the high-risk deposit vertical and a smaller team for routine activity, so the high-risk workload cannot silently consume the rest.

Stress testing where none existed

A regulator-grade financial model was built from the system of record, structured so the finance team could run alternative and stress scenarios.

Named, with an honest gap analysis

Job descriptions were prepared for the roles most essential to safety and soundness, and regulation-tested leadership was named as the hardest gap to close.

Explore the Framework
THE SOLUTION

A defensible program sized to real activity

A defensible, bottom-up BSA and AML staffing model, usable as an ongoing planning tool as the business changes. A regulator-grade financial model and stress-testing capability where none had existed. A restructured, two-team compliance design matched to the bank’s real risk profile. Critical-role job descriptions and an honest leadership gap analysis. A remediation timeline set in motion.

Velocity, not asset size, is the real measure Two lessons travel well beyond this engagement. Asset size is a poor proxy for compliance burden. A small bank can carry the BSA workload of an institution many times larger when the velocity of funds through it is high. And headcount ratios mislead. An early read of the branch network flagged apparent understaffing against a simple per-branch target, until a closer look revealed other departments were cross-covering on an as-needed basis. The org chart said one thing; how the work actually flowed said another.

Any institution whose risk profile runs ahead of its balance sheet, and any bank serving a cash-intensive or higher-risk vertical under heightened regulatory expectations.

The Approach

Size the program to the work, not to peer headcount ratios

Endurance Advisory was engaged to assess and rebuild the program’s staffing and controls and to establish a defensible capital planning process.

Outcomes

What the bank took to examiners

Staffing model built from transaction volume

The model counts customers and transactions, grades them by risk, assigns standard processing times, and derives the full-time-equivalent staff the program actually needs.

Compliance structure separated by risk

A specialized team for the high-risk deposit vertical and a smaller team for routine activity, so the high-risk workload cannot silently consume the rest.

Stress testing where none existed

A regulator-grade financial model was built from the system of record, structured so the finance team could run alternative and stress scenarios.

Named, with an honest gap analysis

Job descriptions were prepared for the roles most essential to safety and soundness, and regulation-tested leadership was named as the hardest gap to close.

Explore the Framework
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