Risk Management Framework

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Document Version: 1.0
Publication Date: June 27, 2025
Scope: All AI solution projects and payment processing

1. Project Risk Control System

1.1 Project Initiation Risk Control

• Client Qualification Review: Verification of client identity, business legitimacy, and source of funds.
• Project Feasibility Assessment: Technical feasibility analysis and risk pre-warning.
• Contract Term Review: Ensuring clear project scope and objective acceptance criteria.
• Advance Payment Guarantee: A 30% initiation payment is strictly tied to project milestones.

1.2 Project Execution Risk Control

• Phased Delivery: A 10-week project cycle divided into 4 main phases.
• Milestone Acceptance: Each phase has clear deliverables and acceptance criteria.
• Progress Monitoring: Weekly project reports and real-time risk alerts.
• Quality Assurance: Objective performance metrics and third-party testing verification.

1.3 Technical Risk Control

• Model Performance Guarantee: Quantified accuracy and performance metric requirements.
• Data Security Measures: A data protection system based on the ISO 27001 standard.
• Intellectual Property Protection: Clear definition of IP ownership and usage rights.
• Technical Support: 90-day warranty period with free technical support.

2. Payment Security Control Mechanism

2.1 Payment Channel Security

• Recognized Payment Platforms: Use of internationally recognized payment processing providers only.
• Multi-Factor Authentication: Client identity and authorization verification before payment.
• Encrypted Transmission: End-to-end encryption for all payment information.
• Transaction Records: Complete payment trail and audit logs.

2.2 Fund Security Guarantee

• Escrow Services: Support for third-party fund escrow for large-scale projects.
• Installment Payments: Payment plan strictly linked to project progress.
• Refund Mechanism: Clear refund conditions and a rapid processing procedure.
• Dispute Resolution: Fast-track mediation and arbitration mechanism within 15 days.

2.3 Anti-Fraud Control

• Transaction Monitoring: Real-time detection and alerting for abnormal transactions.
• Customer Profiling: Risk assessment model based on historical data.
• Multi-dimensional Verification: Combination of geolocation, device fingerprinting, and other verification methods.
• Manual Review: Manual review process for high-risk transactions.

3. Compliance Risk Control

3.1 Anti-Money Laundering (AML) Control

• Customer Due Diligence: Comprehensive KYC (Know Your Customer) procedures and client background checks.
• Transaction Monitoring: AI-based identification and reporting of suspicious transactions.
• Sanctions Screening: Real-time sanctions list checks and updates (e.g., OFAC).
• Record Keeping: Complete retention of customer and transaction records.

3.2 Export Control Compliance

• Technology Classification: Export control classification review for AI technologies (EAR).
• Client Screening: Ensuring clients are not on any prohibited entity lists (ITAR).
• Use-Case Control: Strict restrictions on high-risk use cases and application scenarios.
• License Management: Application for export licenses when necessary.

3.3 Data Protection Compliance

• Data Classification: Sensitivity classification and protection for all client data.
• Cross-Border Transfers: Data transfer mechanisms compliant with GDPR and other regulations.
• Access Control: Role-based access control (RBAC) for data management.
• Data Destruction: Secure data destruction procedures at the end of a project.

4. Customer Risk Assessment Framework

4.1 Customer Risk Classification

Low-Risk Clients:

• Well-known enterprises with a good business reputation.
• Clear business use cases and application scenarios.
• Complete corporate qualifications and financial capacity.

Medium-Risk Clients:

• Small and medium-sized enterprises with relatively transparent operations.
• Standard business applications with controllable risks.
• Require enhanced due diligence.

High-Risk Clients:

• Newly established companies or those with complex ownership structures.
• Clients in sensitive industries or regions.
• Require the highest level of scrutiny and monitoring.

4.2 Risk Assessment Metrics

• Financial Status: Legitimacy of funding sources and payment ability (IFRS).
• Nature of Business: Whether it involves sensitive industries or applications.
• Geographic Location: Risk level of the client's jurisdiction.
• Technical Requirements: Sensitivity and risk level of the AI application.

5. Emergency Response Mechanism

5.1 Payment Dispute Handling

• Immediate Response: Acknowledgment of dispute report within 2 hours.
• Investigation Procedure: Preliminary investigation completed within 48 hours.
• Resolution Proposal: Solution provided within 7 business days.
• Escalation Mechanism: Escalation process for complex disputes.

5.2 Security Incident Response

• Incident Classification: Tiered response mechanism based on severity.
• Notification Procedure: Timely notification to clients and regulatory authorities.
• Impact Assessment: Rapid evaluation of the incident's scope and damage.
• Remediation Measures: Immediate action to prevent further losses.

5.3 Compliance Violation Handling

• Internal Investigation: Immediate launch of an internal compliance investigation.
• External Reporting: Reporting to relevant authorities as required by law.
• Corrective Actions: Development and implementation of corrective and preventive measures.
• Continuous Monitoring: Enhanced subsequent monitoring and compliance checks.

6. Risk Monitoring and Reporting

6.1 Real-time Monitoring Indicators

• Project Progress Risk: Indicators for schedule delays and quality risks.
• Payment Risk: Indicators for abnormal transactions and fraud risks.
• Compliance Risk: Indicators for regulatory changes and violation risks.
• Customer Risk: Indicators for customer credit and behavioral risks.

6.2 Periodic Risk Reports

• Weekly Reports: Weekly summary of project and payment risks.
• Monthly Reports: Comprehensive risk assessment and trend analysis.
• Quarterly Reports: Evaluation of the risk control system's effectiveness.
• Annual Reports: Comprehensive review and improvement of risk management.

6.3 Risk Alert Mechanism

• Early Warning: Data-driven risk prediction.
• Threshold Setting: Alert thresholds for key risk indicators.
• Automated Notifications: Automatic alerts when thresholds are breached.
• Contingency Plans: Pre-defined response plans for different risk levels.

7. Continuous Improvement Mechanism

7.1 Risk Assessment Updates

• Regular Evaluation: Quarterly updates to the risk assessment model.
• New Risk Identification: Continuous identification of emerging risks and threats.
• Best Practices: Learning from OECD AI Principles and industry best practices and experiences.
• Technology Upgrades: Regular upgrades to risk control technologies and tools.

7.2 Process Optimization

• Efficiency Improvement: Enhancing efficiency while ensuring security.
• User Experience: Balancing risk control with user experience.
• Cost Optimization: Reducing the operational costs of risk control.
• Automation: Increasing automated risk detection and response.

Contact Information:

• Legal & Compliance: [email protected]

This document is updated periodically to reflect the latest risk control measures and best practices.