Challenges for Customs Risk Management Today: A Literature Review

Abstract

Changes and uncertainty in the customs operating environment and the growth of trade and travel volumes have affected how customs administrations manage and approach their tasks. As a result of technological development, the role of customs in border control has changed dramatically. Thus, the massive volume of goods, the way they are traded worldwide, and the speed of such transactions create additional fiscal, security, financial, and safety risks, affecting the resources available to customs services. The current geopolitical situation has significantly impacted the role of customs services. The topic is relevant to simultaneously assure both the quality of the services provided by the customs and compliance with the requirements set in the framework of limited resources. This study focuses on customs risk management (CRM) issues. It acknowledges that the customs services must continuously improve their operational methods, including promoting a more structured, integrated, and systematic way to manage customs risks. Based on the literature review, we examine the CRM-related challenges and how scholars address them in the scientific literature. This study aims to identify and analyse the contemporary challenges in CRM from its effectiveness point of view. We employ a systematic literature review, searching in most recognised databases and covering the period of 2005–2024. We follow this with a qualitative content analysis and synthesis, summarising and discussing the study results. We identify and discuss relevant key factors contributing to effective CRM. Finally, we conclude with the implications of the findings for CRM practice and policy, as well as with various potential developments in CRM that we suggest for further work.

1. Introduction

In June 2005, the WCO’s Council meeting in Brussels adopted the SAFE Framework of Standards, which sets international standards for customs to secure and facilitate global trade. The document is updated every three years to ensure it remains relevant and reflects new opportunities, challenges, and related solutions, including improving supply chain security and efficiency based on mutual trust and transparency (WCO 2021). The SAFE standard system is based on modern international models for producing and distributing goods, creating the conditions for international trade and facilitating international trade. The standards aim to promote and encourage the movement of goods across borders for buyers and sellers. Thus, this system was the first to require the Authorized Economic Operator (AEO) traders to gain an advantage over other traders through reduced risk assessment, reduced inspection intensity, and the faster processing of goods, which means time and cost savings. The system benefits companies that meet minimum supply chain security standards and best practices (WCO 2021). The SAFE Framework of Standards was one of the first to establish risk management as one of the fundamental principles of modern customs cooperation, enabling customs to carry out appropriate controls with minimum disruption to legitimate trade (WCO 2018). Thus, introducing these principles provides new opportunities for customs cooperation and more reasonably exploring CRM from the point of view of its effectiveness.

The objectives of the customs services of the European Union (EU) are to protect the financial interests of the EU and its Member States, to ensure the security of the EU and its citizens and to protect the environment, where necessary, in close cooperation with other authorities, as well as to protect the EU against unfair and illegal trade while supporting legitimate transactions and to maintain an appropriate balance between customs controls and the promotion of legitimate trade, avoiding unnecessary burdens to honest companies (EP 2013). An effective CRM is recognised as one of the critical conditions for customs services. But what is an effective CRM, and how do scholars in the scientific literature assess it? This research question is being addressed in this study. The research aims to conduct a literature review to identify and analyse the contemporary challenges in CRM.

Legitimate international trade is an essential driver for economic prosperity. The global trading system is vulnerable to terrorist exploitation that would severely damage the entire global economy and the social well-being of nations. Particular governmental organisations supervise and control the international movement of goods. Thus, customs administrations as public authorities are uniquely positioned to provide increased security to the global supply chain and contribute to socio-economic development through revenue collection and trade facilitation (WCO 2021). These authorities operate in today’s global economy and face various complex challenges. The primary responsibilities are still revenue collection and protecting society and the environment. However, these complex tasks must be carried out efficiently while facilitating the legal flow of goods (Drobot et al. 2017).

Globalisation has contributed to modern economic growth and social development in many parts of the world. Governments increasingly apply new technologies to ensure public safety and protect their citizens. Technology can significantly contribute to these efforts to contain these threats by improving the efficiency and effectiveness of public administrations (Kim and Kim 2020).

Technological development has ensured the free flow of goods, services, capital, and labour across borders. These transactions have become an essential part of modern economic and social development. At the same time, the cross-border supply of harmful goods and the movement of dangerous persons threaten the economy, society, and environment (Kim and Kim 2020). Therefore, preventing such risk and uncertainty has become an essential agenda item for both governments and citizens.

Over the last 20 years, the increasing value and volume of internationally traded goods and the reduced safety and security of international supply chains, especially after the terrorist attacks of 11 September 2001 in New York, have required customs administrations, as the authorities responsible for implementing customs policy, to manage new trends and challenges. The terrorist attacks of 11 September 2001 undermined the security of international supply chains in several significant ways, significantly changing the global trade and logistics landscape. The attacks showed the vulnerability of international supply chains to terrorist activity, raising awareness and fear of similar attacks in the future. This realisation prompted governments and businesses to reassess and revise their security measures while not increasing administrative barriers for honest supply chain actors. These objectives can only be achieved if the customs authority applies a risk management approach linked to sound governance principles to improve the legal, economic, and social environment in which the market, private enterprise, and civil society operate (Biljan 2014). Customs administrations and private companies should continue focusing on risk management and supply chain security (Shubailat et al. 2024).

In recent years, changes and uncertainties in the customs operating environment, in line with the growth in trade and travel volumes, have influenced how customs administrations manage and approach their tasks. The current geopolitical situation has significantly impacted the role of customs services in monitoring compliance with sanctions against the Russian Federation and the Republic of Belarus, preventing the movement of sanctioned goods across the EU–Russia and EU–Belarus borders.

Therefore, the effective management of customs risks and opportunities for its development is essential for developing the customs service. Based on the above provided historical insight, the objectives of customs services, globalisation trends, technological development, and geopolitical impacts, the motivation and context for the literature review have been set. Examining today’s challenges in CRM and how these challenges are being addressed, we have identified several key factors contributing to effective CRM. These factors include using advanced technologies such as data analytics and machine learning, collaboration and information sharing between customs authorities, and aligning risk management strategies with international standards and best practices.

In the following, we first describe a methodology (Section 2), including a systematic literature review on CRM-related challenges and using the PRISMA approach. We apply this approach to the study objectives properly, design the steps of the literature search and selection, and continue with the qualitative content analysis and synthesis, focusing on the effectiveness aspects of CRM. Then, we overview the reviewed studies and reveal the key findings of content analysis (Section 3), where we consolidate knowledge about the definitions, aims, and objectives of CRM with a bit of interpretation of the results in this section. Considering this study’s research question, we identify and describe the impact of CRM (rationale and application) on the organisation’s environments. Then, in Section 4, we critically analyse, interpret, and discuss achieved results. The review concludes with key findings, insights, practical implications, and recommendations, acknowledges the study limitations, and provides various suggestions for future research.

2. Methodology

A systematic literature review was conducted for this study, aiming to identify and analyse the contemporary challenges in CRM that scholars in the scientific literature address. Thus, we designed the study considering the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-analyses) approach for literature search and selection (Moher et al. 2009; Page et al. 2021). The literature search was conducted in January 2024. SCOPUS, Web of Science, and Science Direct databases were used as information sources to select high-quality peer-reviewed scientific articles related to the topic. Other commonly used databases of this quality were not chosen, minimising the duplication of selected articles. The systematic review method was used in the study. For the initial selection in the databases, the terms “risk”, “management”, and “customs” in the “Article title”, “Abstract”, and “Keywords” were used to identify 2438 records. No restrictions were imposed on searching the Web of Science and Science Direct databases. Search in the SCOPUS database was limited to (1) language “English”; (2) publication type “Article”, “Conference paper”, and “Book chapter”; and (3) subject area “Social Sciences”, “Business, Management and Accounting”, “Computer Science”, “Engineering”, “Economics, Econometrics and Finance”, “Decision Sciences”, and “Mathematics”. The records were identified from other sources, including those relevant to the study of CRM: (1) websites; (2) organisations like the World Trade Organization (WTO), United Nations (UNECE), and World Customs Organization (WCO); and (3) citations from particular references. Additional literature sources were selected on the web. The comparatively extensive Google Scholar search tools were used as an extra source to identify the records. A total of 1408 studies were excluded because of either duplication or unavailability, leaving 1066 potential studies. These studies were examined for further inclusion in the review based on their titles and abstracts, reflecting their relevance to the CRM topic. A few full-text articles were unavailable, and only an abstract was available in English, which, in turn, mentions the key terms of CRM. Thus, 118 studies were retrieved for eligibility assessment. A comparatively large number of studies were identified in which the term “customs” did not correspond to the study object. The selected studies were again screened based on the full-text review, considering the relevance to the CRM topic. The full-text review was conducted through two stages. First, the lead author reviewed all selected studies, and the fourth author checked and reflected on the selection of particular studies. Second, considering the reasoned opinions, the final consensus-based decisions were made.

Finally, after excluding another 67 studies, 51 were included in the literature review for further content analysis and qualitative synthesis. Figure 1 shows the flowchart with different steps of the literature selection process based on the PRISMA approach.

A deductive approach was followed for the content analysis of the selected 51 studies. In particular, we designed a structured Excel spreadsheet to specify and classify extracted information. Thus, based on the content analysis of extracted texts, we (1) grouped related CRM issues into two nodes, “Concept” and “Purpose”, to consolidate knowledge about how the CRM is defined and what its aims and objectives are; (2) identified the impact of CRM on the organisation’s internal and external environments and proposed another two nodes, “Rationale” and “Application”, to describe this impact by understanding why effective CRM is needed and where and how it is used. The content analysis and classification were conducted through four stages. First, the lead author reviewed all selected studies, and all authors agreed to specify particular texts into proposed nodes. Second, each author contributed to extracting appropriate text from one of the nodes’ texts. Third, the cross-check was organised, and the lead author identified the areas of disagreement. Finally, considering the opinions of all authors, the authors elaborated on the areas of dispute and made final consensus-based decisions. The processes of cross-checking and reflection on the literature selection due to constructive discussions among co-authors were organised to minimise the selection bias before the final decisions. Key decisions were made concluding each of the three stages designed in the PRISMA flowchart—identification, screening, and inclusion (see Figure 1).

The selection of literature in English is a limitation of the study. Several limitations of this study are related to the analysis and design of the results: (1) the use of advanced visualisation tools, e.g., VOSviewer, Bibliometrix, and CiteSpace, would allow designing research results in a more specific way; (2) additional statistical data or metrics could provide more robust evidence about observed trends; and (3) comparative analysis between different time periods, regions, or types of publications could provide deeper insights into CRM-related challenges.

3. Results

3.1. Overview of the Studies Included in the Review

The 51 reviewed studies included articles (n = 29), conference papers (n = 18), and book chapters (n = 4). Among the 27 publications selected from the SCOPUS database were articles (n = 15), conference papers (n = 11), and book chapters (n = 1). Among publicly available publications on CRM, the number of publications per year was low comparatively. The number of annual publications on CRM topics published from 2005 to 2020 has gradually increased: respectively, 2005–2010 (n = 3), 2011–2015 (n = 14), 2016–2020 (n = 24), and 2021–2024 (n = 10). The majority of the published studies that are available from the SCOPUS database were conducted with participants from China (n = 5), followed by France (n = 3), Ukraine (n = 3), Italy (n = 1), Uzbekistan (n = 2), South Korea (n = 2), Russian Federation (n = 2), the Netherlands (n = 2), Jordan (n = 2), the United States (n = 1), Taiwan (n = 1), South Africa (n = 1), Norway (n = 1), New Zealand (n = 1), Nepal (n = 1), Mongolia (n = 1), Malaysia (n = 1), Georgia (n = 1), and Belgium (n = 1). The largest share of the scientific publications that are available from the SCOPUS database are in the subject area of Computer Science (n = 12), followed by Social Sciences (n = 11), Business, Management and Accounting (n = 9), Economics, Econometrics and Finance (n = 8), Engineering (n = 7), Decision Sciences (n = 4), and Mathematics (n = 4). The overview shows that scholars have widely reflected on CRM and related issues, and there has been a growing scientific interest in recent years. It is evident that the articles mainly study the countries of the authors representing them or do not specifically mention which countries are analysed by the authors.

3.2. Key Findings of Content Analysis

From the studies included in the literature review, we conducted a content analysis focusing on CRM-related challenges. First, we consolidated knowledge from the scientific literature about the definitions, aims, and objectives of CRM. Second, we summarised the achieved findings in

Table 1. Challenges related to CRM (Concept).

Concept: Definitions of CRM	References
- risk analysis is a critical factor in trade facilitation into overall strategies for modernising customs administrations	(Geourjon and Laporte 2005)
- compliance with standards indicates effective risk management	(Bukhsh and Weigand 2013)
- effective CMR is at the core of modern customs operations, allowing an appropriate balance between trade facilitation and regulatory control	(Biljan 2014)
- a clear understanding of the nature of the risks
- the systematic implementation of procedures: risk identification; risk assessment, consisting of risk analysis and risk evaluation; risk treatment; monitoring and review; and communication and consultation within national customs administrations
- an efficient and effective technique that stems from progress in science, technology, and management innovation	(Davaa and Namsrai 2015)
- predominantly viewed in the context of the application of an automated system to select high-risk transactions and determine the form and scope of customs control over them	(Komarov 2016)
- a systematic method associated with any activity or process in an organisation that enables to take advantage of opportunities and minimise potential losses - a proper mindset without which customs authorities cannot react to different situations and anticipate the necessary initiatives - a key measure contained in the WTO Trade Facilitation Agreement (TFA) - the systematic work of developing and implementing risk prevention and mitigation measures in practice - an effective way of handling flows involving large numbers of people, goods, and vehicles with limited resources and variable risks without disrupting the flow of legitimate trade	(Drobot et al. 2017)
- a fundamental principle of modern customs control methods, which allows optimum use of customs authorities’ resources without reducing the effectiveness of customs controls and freeing most foreign trade operators from unnecessary bureaucratic controls	(Afanasieva et al. 2017)
- an interactive process in which information is continuously updated, analysed, and considered to implement preventive and corrective actions	(Drobot et al. 2017)
- worldwide concept to ensure the safety of people and goods - linked to any activity, function, or process in an organisation and will enable the organisation to seize opportunities and mitigate potential losses	(Anouche and Boumaaz 2019)
- coordinated risk management and control activities that help customs officials meet the challenges posed by limited resources	(Basir et al. 2019)
- a critical method of customs control principles	(Harmash 2019)
- coordinating risk management and control activities that help customs officials address the challenge of limited resources, increasing trade volumes and the need for fast clearance - preventing or reducing the likelihood of failure or unexpected consequences, as well as thinking creatively and using opportunities for effective information flow and staff collaboration - human, material, and financial resources and legal frameworks are managed to cope with cost and time constraints to achieve specific objectives	(Satyadini et al. 2020)
- a systematic action by customs authorities to reduce the likelihood of non-compliance events by international treaties and national customs legislation	(Abdurahmanov et al. 2020)
- coordinated actions to manage and control an organisation’s risk	(Kim and Kim 2020)
- a set of interrelated structures and management tools that ensure the analysis, identification, assessment, and mitigation of risks during customs controls - a source of further automated release of customs declarations - a source of further automated release of customs declarations	(Nemirova and Savelyeva 2020)
- basis for the development of automatic release and automatic registration technologies
- an integrated approach to strengthen customs controls while encouraging economic operators’ voluntary compliance and supporting improved trade competitiveness	(Azael Prerez Azcarraga and Juan 2022)
- effective risk management strategies highlight the symbiotic relationship between risk mitigation and sustainability	(Shubailat et al. 2024)

and

Table 2. Challenges related to CRM (Purpose).

Purpose: Aims and Objectives of CRM	References
- provide a sophisticated risk management method - facilitate trade by automatically and rationally selecting transactions and enhancing revenue performance - targeting of transactions for inspection for fear of losing revenue	(Geourjon and Laporte 2005)
- focus customs control activities and limited resources on specific risks	(Liu et al. 2009)
- determine which persons, goods, and means of transport are to be checked and to what extent	(Biljan and Trajkov 2012)
- limit risk exposure at strategic, operational, and tactical levels	(Biljan 2014)
- assess the effectiveness of the application and monitor the performance of client operations	(Drobot et al. 2017)
- the systematic identification of risk, including through spot checks, and the implementation of all measures to limit exposure to risk	(Afanasieva et al. 2017)
- identify and address the risks with the most significant impact	(Drobot et al. 2017)
- increase trade volumes and the need for fast clearance - assess risk and decide on the application of risk mitigation measures necessary for customs control - reduce overall risk and administrative barriers	(Basir et al. 2019)
- minimise trading interference and regulatory burden - the application of risk assessment techniques to know who is moving what, to whom, and from where - the introduction of the AEO programme to reduce security risks in the trade supply chain - protect public safety, domestic industry, and national sovereignty - categorisation to reduce the number of checks on law-abiding companies and to focus on those external economic operators who are exposed to infringements of the law - AEO for the convenience of traders, reducing the time and financial costs of moving goods across the customs border	(Satyadini et al. 2020)
- a powerful tool to balance between trade facilitation and revenue maximisation	(Al-Shbail 2020)
- the protection of society, culture, intellectual property, and the environment	(Kim and Kim 2020)
- improve operations and decision-making and reduce the impact of risk events on operational activities	(Frikha and Mraihi 2020)
- increase the efficiency of the implementation of customs control forms	(Nemirova and Savelyeva 2020)
- reduce the burden on customs officials, allowing them to focus their efforts on the riskiest supplies
- collecting data and information, analysing and assessing risk, making recommendations and initiating action, and regularly monitoring and reviewing the process and its results	(Laszuk and Šramková 2021)
- key indicators must be established for analysis to monitor results and overall performance of customs against its operational and strategic objectives	(Azael Prerez Azcarraga and Juan 2022)
- identify suspicious imported goods	(Jeong et al. 2022)
- intelligence supports with the information to develop warning systems	(Ylönen and Aven 2023)

by indicating references.

Focusing on the reasonable modernisation of customs administrations in developing countries, Geourjon and Laporte (2005) and Laporte (2011) pointed to a sophisticated risk management method to facilitate trade by automatically and rationally selecting transactions and promoting a positive effect on revenue performance. They argued towards a systems approach for targeting transactions for inspection for fear of losing revenue and indicated risk analysis as a critical factor in trade facilitation. The risk management approach aims to focus on customs control activities and limited resources, in particular, on specific risks that the measures taken by companies do not sufficiently cover (Liu et al. 2009). Biljan and Trajkov (2012) see a crucial feature of CRM in checking persons, goods, and means of transport. Bukhsh and Weigand (2013) relate the effectiveness of CRM to compliance with specific standards. Effective CRM provides an appropriate balance between trade facilitation and regulatory control and promotes a clear understanding of the nature of possible risks (Biljan 2014). Biljan (2014) describes CRM as a systematic process that identifies and implements all necessary measures to limit risk exposure at different management levels. He also points out a series of procedures to be carried out by customs administrations. Davaa and Namsrai (2015) relate risk management with an efficient and effective technique from technological progress. Komarov (2016) views it in the context of the application of an automated system facing high-risk transactions.

Drobot et al. (2017) define risk management as a logical and systematic method of identifying, analysing, and managing risk and associating this management with any activity or process in an organisation, taking advantage of and minimising potential losses. Afanasieva et al. (2017) identify risk management as “a key principle of modern customs control methods”, allowing for diminishing the administrative burdens of the controls, while Harmash (2019) sees a risk management system as “a key method of customs control principles”. Drobot et al. (2017) describe risk management as an interactive process where information management is crucial in implementing preventive and corrective actions. They emphasise intelligence-enhanced risk management that combines the information and knowledge acquired by customs services to systematically identify and analyse the risks. Anouche and Boumaaz (2019) conceptualise risk management as attracting the attention of managers and organisations worldwide to ensure the safety of people and goods. They link the concept to any activity, function, or process in an organisation, enabling the capture of opportunities and the mitigation of potential losses. Basir et al. (2019) underline the coordinated risk management and control activities for helping customs authorities meet the challenges posed by limited resources, increasing trade volumes and the need for fast clearance. They design risk management to assess risk and decide on applying risk mitigation measures necessary for customs control. They also emphasise the importance of a holistic approach to reduce the overall risk in organisations and reduce administrative barriers during customs clearance for companies that always comply with customs regulations.

The remarkable contribution of Satyadini et al. (2020) frames risk management and proposes a technological approach in CRM by emphasising the role of artificial intelligence (AI) in processing the relevant customs procedures. They stress that the CRM system needs to be dynamically improved to keep pace with changes in the global value chain. Thus, risk management should cover not only preventing or reducing the likelihood of failure or unexpected consequences but also creative thinking and using opportunities for adequate information flow and staff collaboration. Accordingly, a well-defined and structured risk management framework should be implemented to minimise trading interference and regulatory burden. In addition, risk assessment techniques should be used to know who is moving what, to whom, and from where (Satyadini et al. 2020). The AEO programme is recognised as one of the highest-level policy decisions and attitudes of the risk-owner to reduce security risks in the trade supply chain. As the organisational goal of CRM is to protect public safety, domestic industry, and national sovereignty, the methodologies supporting this goal must be flexible and adaptable and take into account changes in the operating environment at both national and international levels (Satyadini et al. 2020). Satyadini et al. (2020) indicate that categorisation in CRM helps to enhance efficiency, e.g., reduce the number of checks on law-abiding companies to focus on those external economic operators exposed to law infringements. Establishing AEO is a further step to ensure that a category of persons who enjoy the confidence of the customs authorities can benefit from simplified customs controls. They also indicate the motivational arguments towards AEO, which directly affects the acceleration of trade and industrial potential development and the strengthening of the regional economy.

Describing CRM as a process, Abdurahmanov et al. (2020) relate it to a systematic action by customs authorities to reduce the likelihood of non-compliance events by international treaties and national customs legislation. Kim and Kim (2020) see it as coordinated actions to manage and control an organisation concerning risk, aiming for responsible modern customs services to protect society, culture, intellectual property, and the environment. Frikha and Mraihi (2020) underline the identification, analysis, assessment, and treatment of risks in the way that these customs activities significantly improve operations and decision-making and reduce the impact of risk events on operational activities. Nemirova and Savelyeva (2020) define CRM as a set of interrelated structures and management tools that ensure the analysis, identification, assessment, and mitigation of risks during customs controls. Thus, in line with customs practice, CRM is a source of the further automated release of customs declarations, which reduces information costs for service users and increases the efficiency of the implementation of customs control forms. They also describe CRM as a system that is the basis for the development of automatic release and automatic registration technologies because automated decision-making significantly reduces the burden on customs officials, allowing them to focus their efforts on the riskiest supplies. Laszuk and Šramková (2021) point out the significance of EU legislation to apply risk management in collecting data and information, analysing and assessing risk, making recommendations and initiating action, and regularly monitoring and reviewing the process and its results based on international, EU, and national law. The vital contribution of Azael Prerez Azcarraga and Juan (2022) strives towards an integrated risk management approach, which requires changes in mindsets, improved coordination, and performance monitoring. Ylönen and Aven (2023) emphasise intelligence tools to support risk management as they warn of potential threats despite high uncertainty. They indicate that this support provides valuable information for developing appropriate warning systems, an essential part of risk management strategies. Brown and Chew (1999) describe risk management strategies comprehensively. A risk management system has to identify suspicious imported goods (Jeong et al. 2022). Concluding here with the main findings of the performed content analysis, we found it helpful to refer to Shubailat et al. (2024), as they address the effective risk management strategies that have a positive impact on sustainable supply chain initiatives, highlighting the symbiotic relationship between risk mitigation and sustainability.

Based on the conducted content analysis of CRM challenges, we also identified the impact of CRM on the organisation’s internal and external environments. We described this impact to understand why effective CRM is needed and where and how it is used. We summarise the findings in

Table 3. Impact of CRM on organisation’s internal environment.

Rationale

focus limited resources on specific risks

limited risk exposure at strategic, operational, and tactical levels

implemented measures to limit exposure to risk

improved coordination, helping customs officials to solve problems

reduced the overall level of risk

assisted customs officials in addressing the problem of limited resources

dynamically upgraded to keep pace with changes

prevented or reduced the likelihood of failures or unexpected outcomes

improved operations and decision-making and reduced the impact of risk events on operational activities

provided flexibility and adaptability to changes

increased efficiency of customs controls

Application

systematic method associated with any activity or process in an organisation enabling to take advantage of opportunities and minimise potential losses

proper mindset for customs authorities to react to different situations and anticipate the necessary initiatives

allows optimum use of customs authorities’ resources without reducing the effectiveness of customs controls

interactive process for preventive and corrective action

combine the information and knowledge acquired by the customs services with a systematic approach to identify and address the risks with the most significant impact

decision-making on the application of risk mitigation measures necessary for customs control

harnessing creative thinking and opportunities for effective information flow and staff collaboration

a source of further automated release of customs declarations to increase the efficiency of the implementation of customs control forms

basis for the development of automatic release and automatic registration technologies

automated decision-making significantly reduces the burden on customs officials

intelligence as a risk management support tool, providing warnings of potential threats despite high uncertainty

and

Table 4. Impact of CRM on organisation’s external environment.

Rationale

a clear understanding of the nature of the risks

an effective way of handling flows involving large numbers of people, goods, and vehicles with limited resources and variable risks without disrupting the flow of legitimate trade

freeing most foreign trade operators from unnecessary bureaucratic controls

reduced administrative barriers for companies that always comply with customs rules

assistance to address the problem of increasing trade volumes and the need for fast clearance

reduced interference in trade transactions and regulatory burden

provided knowledge of who moves what, to whom, and from where

reduced costs for consumers

identified suspicious imported goods

a positive impact on sustainable supply chain initiatives

assistance to reduce the number of checks on law-abiding companies and to focus on those external economic operators who are exposed to infringements of the law

Application

a concept to ensure the safety of people and goods

AEO programmes to reduce security risks in the trade supply chain

protection of society, culture, intellectual property, and the environment

securing public safety, domestic industry, and national sovereignty

effective strategies have a positive impact on sustainable supply chain initiatives

.

Assessing the impact of CRM on an organisation’s internal and external environments, we conclude that its effectiveness benefits the customs organisations, enterprises, and society as a whole.

CRM enables the customs authorities to use the limited resources at their disposal as efficiently as possible by selecting high-risk goods and means of transport for control. CRM is necessary to enable customs services to protect the EU against unfair and illegal trade while supporting legitimate transactions. Through effective CRM, customs authorities should be able to distinguish between law-abiding traders to make border crossing and clearance as easy as possible for such traders, including through the introduction of automated clearance. CRM is not just a process within an organisation; it is a way of thinking that helps organisations solve different problems and achieve their objectives. It helps to understand the nature of the risks clearly. Effective CRM involves the systematic implementation of procedures: risk identification, risk assessment (including risk analysis and risk evaluation), risk treatment, monitoring and review, as well as communication and consultation within national customs administrations. Summarising the meta-analysis, we see the updated CRM process when integrating the effective risk management strategies to positively enhance sustainability actions and relate risk mitigation initiatives with sustainability measures.

4. Discussion

In general, the results of the performed literature review respond to what constitutes an effective CRM and its vitality and show its diverse assessment of the research community. A body of research has grown within traditional risk management thinking that supports using risk-based thinking in institutional reforms, considering the requirements of international standards. Several studies have documented the administrative and legal framework for risk management. WTO has defined the facilitation of international trade as a critical element of global economic development aimed at reducing administrative barriers to the movement of goods across national borders, including by simplifying the processes involved in clearing goods. Trade facilitation makes trade transactions more accessible, faster, more efficient, and cheaper, thereby facilitating trade flows, for instance, according to the study by Bhero and Hoffman (2017). Trade facilitation increases a country’s attractiveness for foreign direct investment by making exporting and importing goods and services easier. Trade facilitation can have great potential for a country’s economic development (UNECE 2023). Public authorities benefit from the improved collection of taxes, better use of resources, and greater compliance by traders. More efficient and transparent public service delivery will allow the administration to maintain a high level of security and effective control functions while reducing opportunities for corruption. In turn, traders involved in international trade will become more competitive thanks to greater transparency, faster transactions, and lower transaction costs. Speeding up procedures and reducing costs attracts investment and supports growth and job creation. Trade facilitation measures are costly for countries to implement and require a cautious approach to ensure that they benefit from a fair business environment while not jeopardising the other essential functions of public authorities.

International trade facilitation measures are often closely linked to the tasks of customs administrations. Customs is one of the key players in trade facilitation from a global supply chain perspective. For this reason, almost all national customs administrations must ensure a balance between customs controls at the border and the facilitation of legitimate trade, which is not easy to achieve in practice since the protection of the financial interests of the State, as well as ensuring safety and security, requires customs administrations to intervene in the processes involved in the movement of goods across borders (UNECE 2023). Such intervention impacts the time required for border crossing and customs formalities and the costs associated with customs controls and customs administration services.

Increasing trade volumes pose challenges and risks for customs in balancing trade facilitation and strict border controls. Given the limited resources, a comprehensive physical verification of all import and export consignments takes a lot of work. To ensure a balance between control and facilitation, the Revised Kyoto Convention (RKC) and the WTO’s Trade Facilitation Agreement (TFA) explicitly require the implementation of an effective risk management system (Regmi and Timalsina 2018). Regarding simplification and harmonisation of customs procedures, the RKC identifies risk management as one of the critical principles of trade facilitation (WCO 2008). The RKC also sets out some common risk management approaches, defined as the application of customs controls and outlined in the standard. The methodology set out in the RKC Review Report establishes a common framework. However, its framework is flexible to suit the unique circumstances of each country. De Wulf and Sokol (2004) have pointed out that “risk management involves a systematic system of risk assessment, profiling and selectivity, intelligence gathering and analysis, and has suggested that this system can help customs focus on high-risk multiple activities such as cargo, traders as well as passengers while maintaining effective and efficient controls at all stages of customs clearance”. It is evident from the literature review that the systems approach in information processing and intelligence drives today’s CRM. Thus, CRM manages customs policies, procedures, and practices with the necessary information and intelligence to identify, analyse, monitor, and address the risks of imported consignments (WCO 2008; Sreya 2020).

In general, the rationality of risk management has been emphasised by many scholars. Gates (2006) has identified the benefits of introducing risk management: more information about risks at the company level, more precise risk terminology, potentially more significant quantification of risks, reduced risk of non-compliance, and increased employee awareness and accountability. It is further mentioned that according to Kleffner et al. (2003), scholars argue that holistic risk management across the enterprise reduces the overall level of risk and creates a culture of vigilant risk monitoring within the organisation. Arguing towards CRM benefits, it is also noted that successful risk management programmes help companies to operate more smoothly and efficiently in a turbulent business environment (Satyadini et al. 2020). The results also demonstrate the strong belief of the customs authorities that risk management is a crucial methodology to simultaneously improve customs control and security on the one hand and trade facilitation on the other. In addition, a partnership-oriented relationship with the private sector and a good reputation for predictable and rapid service delivery can significantly impact a country’s competitiveness and attractiveness for foreign direct investment (Ylönen and Aven 2023).

According to Satyadini et al. (2020) in line with Varese and Ronco (2019), Widdowson (2020), Razumei et al. (2023), and Van Trang et al. (2023), the legal framework for risk management should be based on flexible and tailored solutions to be implemented, with both government and the trading community taking responsibility for compliance, in contrast to the traditional style of governance that relied solely on the trading community. It is further argued that, according to Sparrow (2000), the administrative framework for risk management should be dependent on and appropriate to the level of risk and should focus on post-transaction compliance assessment, including effective redress mechanisms, particularly in high-risk areas, and vice versa. Furthermore, according to Chapman and Ward (2003), the key issues to consider are how to ask what needs to be done, how, when, and who will do it, and what the costs will be. Accordingly, Morris and Hough (1987) argued the importance of setting clear objectives for implementing organisational risk management systems. It should be addressed as a best practice for organisations to focus on the interests of their organisations and their employees through well-developed policies, standards, procedures, and plans (Satyadini et al. 2020). Hou and other scholars elaborate on teaching and training techniques in CRM (Hou 2011, 2015; Hou et al. 2011; Hou and Zeng 2013), Kalmykova et al. (2018) and their impact on the personnel management system. Customs services must keep pace with modern trends in improving public governance by modernising their management structure and organisation, considering national and international trade and customs rules, and developing information and communication technologies (Biljan 2014). The introduction of technology is also a pillar of risk management, not only for the efficient clearance of all goods (Regmi and Timalsina 2018) but also for the most effective way of achieving the objectives of the customs service (Fedotov and Zotenko 2020).

Customs and border control are undergoing significant changes, driven by geopolitical developments, the increasing flow of goods, and the development of new technologies such as digitalisation and AI tools. These changes create new sources of risk, such as cybercrime, and new opportunities for more effective intelligence and risk analysis, particularly in identifying and detecting sources of risk. AI is becoming increasingly popular in the literature because it involves advanced technology platforms capable of dealing with complex situations characterised by uncertainty and ambiguity. López-Robles et al. (2019) underline AI, which is considered for collecting, analysing, interpreting, and disseminating high-value data, to be used promptly in decision-making. AI constitutes a framework for action and research for organisations that seek to improve their competitiveness by using high-value data in risk management. It is also mentioned by Fan et al. (2017), who highlighted that risk control and management solutions based on AI analytical techniques are seen as resources and capabilities which should be developed and maintained at the risk management framework level, sharing the costs and benefits of such assets. Risk assessment, control, and management are based on data and information. This information should be shared with actors in the supply chain (or commercial processes more broadly), then analysed to assess the actors’ risk, and finally used to make a risk management decision (Satyadini et al. 2020). Similarly, Žigienė et al. (2019) proposed that cognitive analysis or AI helps to integrate complex big data to indicate and integrate known and initially unknown risk factors to process big business data, identifying risk factors in commercial processes. The assumptions behind the use of AI are to increase computers’ computing power and preserve data storage.

Potential developments in CRM have been identified in the literature review. As we have already pointed out, CRM and related issues have yet to be extensively studied by scholars and reflected in scientific publications. Even fewer publications explore the methodology (Zahra and Said 2014) and development options for CRM. Several scholars highlight the use of information technology, including AI, in CRM (Yaquin and Song 2010; Drobot et al. 2017; Liu et al. 2009; Guangce 2012; Duan 2013; Liu et al. 2014; Liao 2017; Giordani 2018; Regmi and Timalsina 2018; McDaniel and Norberg 2019; Pourakbar and Zuidwijk 2018; Sorokin and Sorokin 2019; Kim and Kim 2020; Saidov et al. 2021; and Kuo and Chou 2021). At the same time, they stress that developing ICT requires appropriate tools, emphasising employees (Drobot et al. 2017). According to Jeong et al. (2022), despite the enthusiasm for the use of data and the opportunities offered by AI, adopting new technologies in the customs sector could be faster. The main reason is the need for more publicly available data. AI is making significant advances in many areas, and a high-quality dataset is essential for a good AI model. Hence, Jeong et al. (2022) demonstrate the feasibility of processing datasets of customs import declaration using artificially generated data in their publication.

Hofman et al. (2021) provide a detailed case study on linking customs and business data, assessing their data quality and value in the context of data requirements, and developing an evaluation framework for evaluating the quality and value of linked datasets. The authors propose to use this framework as a support tool for customs experts (at national and international levels) involved in customs data analysis. The proposed framework allows for a drill-down to provide a detailed insight into what data can be found in specific business data sources and how they complement existing customs data. Anouche and Boumaaz (2019) describe a predictive approach using big data, highlighting that the benefits of introducing such practices in a customs context would improve the efficiency and effectiveness of customs risk analysis systems. Big data methods are widely used in customs administration in countries such as the US, Canada, New Zealand, and the UK. Another method used in risk management is the development of matrices that provide consistent risk assessments across processes and facilities to facilitate consistent risk reduction decision-making and provide a rational basis for aggregating risk reduction recommendations into a centralised database for prioritisation and management (Baybutt 2018). Afanasieva et al. (2017) focus on the principles and methods of risk management and their implications for simplifying customs procedures through risk-based thinking. The article discusses the challenges of applying and implementing modern risk management methods in customs work, considering the requirements of international standards based on risk-based thinking. According to Ylönen and Aven (2023), intelligence and risk assessment are crucial activities in customs and border control operations and a prerequisite for the success of customs and border control agencies currently. However, these activities are often carried out separately, although many functions overlap. Both areas address severe threats and risks and use many similar analytical approaches. There are differences in tradition, education, science, and practice between intelligence and risk assessment. Hence, Ylönen and Aven (2023) offer the perspective of integrating intelligence and risk management as a further option for developing a CRM framework. Finally, the development perspective of CRM reveals cooperation with customers, providing incentives for traders, passengers, or stakeholders to comply with the rules and putting in place a reliable enforcement regime that detects and punishes non-compliance efficiently and effectively (Basir et al. 2019). In other words, by influencing customer behaviour and steering them towards low-risk levels, customs authorities can focus more on high-risk control resources.

Scholars have shared divergent views on the effectiveness of risk management. Among the common opinions, the following can be noted. There is a consensus on the role of risk management in customs operations, emphasising its importance in improving customs control, security, and trade facilitation (De Wulf and Sokol 2004; Gates 2006; Kleffner et al. 2003; Satyadini et al. 2020; Ylönen and Aven 2023). Scholars advocate a holistic approach to risk management, emphasising systematic risk assessment, profiling, and information gathering and analysis (De Wulf and Sokol 2004; Kleffner et al. 2003; Afanasieva et al. 2017). The integration of information processing, ICT, and AI in CRM is considered essential to increase efficiency and effectiveness (Regmi and Timalsina 2018; Fedotov and Zotenko 2020; López-Robles et al. 2019; Jeong et al. 2022). There is a shared belief in the importance of cooperation between customs authorities and the private sector, with both parties taking responsibility for compliance (Satyadini et al. 2020; Varese and Ronco 2019; Widdowson 2020). Effective CRM has been recognised as facilitating trade, reducing administrative barriers, and making a country more attractive for foreign direct investment (Ylönen and Aven 2023).

Different perspectives were also highlighted in the scientific articles on CRM. While some scholars argue for flexible and tailored regulatory frameworks for risk management to suit different national contexts (Satyadini et al. 2020), others stress the need for standardised international frameworks (RKC and WTO TFA). While many scholars highlight the importance of AI and big data in CRM (López-Robles et al. 2019; Žigienė et al. 2019), there is a view that adoption can be slow due to data availability challenges (Jeong et al. 2022). Sparrow (2000) emphasises that risk management systems should be risk-dependent and focus on post-transaction compliance, while other scholars suggest a broader approach, including different stages of the customs process (Chapman and Ward 2003; Morris and Hough 1987). Ylönen and Aven (2023) propose integrating intelligence and risk management functions, often mentioned as separate areas by other scholars. Hou and colleagues focus on the importance of teaching and training methods in CRM (Hou et al. 2011; Hou and Zeng 2013), while others do not emphasise this aspect as strongly, instead focusing more on technological and procedural improvements.

The academic papers reflect a broad consensus on the role and benefits of CRM, highlighting its role in improving security, facilitating trade, and promoting cooperation between public authorities and the private sector. However, there are different views on the flexibility of the regulatory framework, the pace of technology adoption, the focus of administrative frameworks, the integration of intelligence and risk management, and the emphasis on staff training. These differences highlight the complexity and multifaceted nature of effective CRM practices.

Implemented risk management practices should streamline customs procedures, reduce administrative barriers, and increase the country’s attractiveness for foreign direct investment. Reviewing and revising customs procedures to eliminate unnecessary steps is essential, facilitating faster and more efficient trade processing. The promotion of these improvements will attract foreign direct investment. A flexible regulatory framework will help adapt to different national circumstances while maintaining basic standards and requirements. Flexible policies will allow adaptation to local needs while aligning with international standards where possible. Ongoing dialogue with stakeholders is needed to ensure that the rules remain relevant and effective. The adoption of AI and big data analytics must be accelerated despite data availability challenges. Solutions to the data availability problem should be sought by improving data collection methods and working with other agencies and the private sector on data sharing. Investment in infrastructure to support the use of advanced technologies is also necessary.

To ensure comprehensive risk management, there is a need to balance the focus between post-transaction compliance and other stages of the customs process. Policies should be developed that cover risk management at several stages of the customs process, including all stages of transactions. Monitoring and evaluation systems should be put in place to track its effectiveness. The integration of intelligence and risk management functions will enhance the improvement of overall efficiency. Integrated units should be set up within customs administrations that combine intelligence and risk management functions. Staff training in both areas would be vital to ensure coordinated actions. Attention should be paid to rigorous training and adaptation programmes for customs officials to ensure they are prepared to work with modern CRM practices. Comprehensive training programmes covering both technological tools and procedural knowledge should be developed. Continuous professional development initiatives should be established to keep staff up-to-date with the latest practices and technologies.

By addressing common and divergent views practically and systematically, customs administrations can improve their risk management capabilities, thereby improving security, facilitating trade, and delivering economic benefits.

5. Conclusions

In this article, we explored the contemporary challenges in CRM, how these are addressed in the scientific literature, and the opportunities to develop the effective management of customs risks. Therefore, we performed a systematic literature review, which, to our knowledge, is the first review that has systematically reviewed and analysed the scientific literature on CRM. The studies included in the review represent different countries, behaviours, approaches, methodologies, and technologies. Based on the literature review, we conducted a content analysis. Then, we consolidated and discussed the knowledge from the scientific literature that allowed us to identify significant factors contributing to effectiveness in CRM. Advanced visualisation tools would allow the creation of bibliometric and citation maps that visualise co-citation networks, the temporal evolution of research topics, and collaboration between authors and institutions.

To provide both the quality of the services provided by customs and compliance with the requirements within a resource-constrained framework, the customs services need to continuously streamline their working methods, including by seeking a more structured and systematic way of managing customs risks, especially if considering so-called wicked problems (Head 2022), which helps to understand and respond to complex challenges, e.g., pandemic threats, risks of disinformation and hybrid warfare, sanctions on the movement of goods, etc.

Although CRM and related issues are not topics that scholars have extensively studied, there has been a growing research interest in recent years. Our study shows that CRM positively impacts both the internal and external elements of the organisation’s environment. The benefits of effective CRM arise for the organisation, the business, and society. Currently, a CRM should be understood and improved adequately as it covers more than just a process within an organisation. It is a way of thinking that helps organisations solve diverse problems and achieve their objectives. Based on the literature review, we acknowledged that effective CRM is essential for successfully performing customs tasks and achieving the goals set for customs, including ensuring countries’ economic and security interests and facilitating international trade.

A comparatively small number of publications explore the methodology and set of techniques for CRM from the effectiveness point of view. The literature review also shows the research gap regarding cooperation between customs organisations and agencies, e.g., border control, law enforcement, national and international customs authorities and services, and its impacts on CRM.

Several key areas can be focused on to effectively apply the insights from scholars on CRM in practice and address the changes necessary in CRM policies and procedures. Shared and divergent views can be integrated into practical use to make the required changes that might be needed. Customs administrations should prioritise risk management as a central component of their operations. This involves regular risk assessments, profiling, and intelligence analysis to enhance security and facilitate trade. Policies should be updated to mandate systematic risk management practices and allocate resources specifically for risk management activities. Adopting a holistic approach would mean integrating risk assessment, profiling, information gathering, and analysis into all stages of customs operations. When developing a comprehensive risk management system, it should cover all customs processes. Training programmes and standard operating procedures must be developed to ensure consistent application. The use of ICT and AI would help to process and analyse data more efficiently, improving the accuracy and speed of risk assessments. Developing the use of ICT and AI in CRM would require investments in modern ICT infrastructure and AI technologies. It is essential to update policies to support the integration of these technologies and provide staff training in their effective use. To share responsibility for compliance and improve overall risk management, it is essential (1) to strengthen the partnership between customs authorities and the private sector, (2) to develop policies that promote and formalise public–private partnerships, and (3) to implement joint compliance programmes and information sharing agreements.

From this study, we outline several perspectives on the development of CRM for further research. First, we encourage extending the use of information technologies, including AI, in CRM. Second, we recommend linking customs and business data and their use in risk analysis and using big data techniques in CRM. Third, we urge researchers to develop CRM methods for assessing the potential integration of intelligence and risk management. Fourth, we suggest developing the applicable indicators and contributing to the methodology for evaluating customs risks. Lastly, we encourage the promotion of beneficial cooperation with customers of customs services to gain necessary feedback for further improvements in CRM.

Exploring essential development trends in the field of CRM, the research outcome acknowledges the importance of ICT and AI for effective CRM in facing globalisation and economic integration processes. We believe that the research findings will encourage further research because they relate to interdisciplinary subject areas and contribute to safe international trade, reliability, and quality issues, providing a focal point for new developments in the field of risk management and sustainable finance practices, e.g., risk frameworks, integration processes, institutional variety, communication, and decision-making.