winning tactics for data governance

Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Compliance · Securities Lending

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WINNING TACTICS FOR DATA

GOVERNANCE

An Excerpt from “2017 Industry Insights:

Perspectives from the Front Line”

by RMA’s Credit Risk Council


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A CRITICAL CHALLENGE

Credit data management and

governance remains one of

the critical challenges facing

risk managers across the

industry, regardless of

bank size or complexity.


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A CRITICAL CHALLENGE (CONT.)

The ability to produce

accurate and consistent

credit information is

essential, whether it be for

public company reporting,

regulatory reporting, or

internal business

consumption.

Public company reporting

Produce accurate, consistent credit info.

Regulatory reporting

Internal business

consumption


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A CRITICAL CHALLENGE (CONT.)

Complicating that effort is that credit data, typically,

comes from:

Multiple

underlying loan

accounting

systems.

Is housed within

varied lines of

business (both

consumer and

commercial).

And is frequently

supported by

multiple vendors.


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EXTRACT, TRANSFORM, LOAD (ETL)

Banks

commonly

use an ETL

process to:

• Pull data from underlying systems,

• Transform it into a common format,

• And then load into some form of

data mart for broader consumption.


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Centralize

ownership

in the

credit risk

organization

The bank’s IT department is a key resource and, typically, is responsible for the actual data production, but there are advantages to having the ownership of the credit data ETL process andday-to-day management of credit data itself centralized within thecredit risk organization.

This ensures that a

high level of subject

matter expertise is

employed in the

management of

credit data.

OWNERSHIP OF THE ETL PROCESS AND

RESULTING DATA PRODUCTION

It also allows you to

leverage deep knowledge of

the underlying credit data into the

various reporting channels (public

company, regulatory, internal).


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FinanceIn addition, it is essential to

have a well-developed and

effective control

environment governing

both the credit ETL

process and upstream

changes in the loan

accounting systems

that feed that

production.

This requires close

engagement with

finance, accounting,

and loan operations

to ensure

appropriate change

controls are in

place.


RESULTING DATA PRODUCTION

Accounting

Loan

operations


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RESULTING DATA PRODUCTION (CONT.)

Things as seemingly simple as

adding a new cost center, or as

complex as adding a new loan

product, can have significant

unanticipated downstream impacts

on credit data and reporting if proper

change controls are not in place.


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Ongoing Data

Quality

Ongoing data quality

monitoring, testing,

and related reporting

is another important

control

to help ensure

that the credit

data mart

remains accurate

and reliable.


RESULTING DATA PRODUCTION (CONT.)

Monitoring

Testing Reporting


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CREDIT DATA IS COMPLEX AND REQUIRES

STRONG GOVERNANCE AROUND REPORTING

Access to the bank’s credit data mart should be tightly managed to

ensure that

Data extraction is done consistently and accurately

And only by those with sufficient technical understanding of the

data itself.


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CREDIT DATA IS COMPLEX AND REQUIRES STRONG

GOVERNANCE AROUND REPORTING (CONT.)

A dedicated credit data

reporting team housed within

the credit risk organization is

one way to ensure tight

controls around credit data

reporting.


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Banks typically produce different views of credit data

depending on the end user or the reporting purpose, all

of which must be well documented.

• For example, a bank’s definition of commercial real

estate exposure will likely be different at a line of

business view versus a regulatory view (including the

call report).


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Having credit data

reporting experts

responsible for

standard report

production as well as

ad hoc reporting is

critical from a data

reporting

governance

perspective.



Standard

reporting

Ad hoc

reporting


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While additional end users with

access to the credit data mart may be

necessary,

clear rules need to be in place to govern such

access

with a requirement that any reporting

go through a validation process with the credit data

reporting team before being shared more

broadly.


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IN SUMMARY

A well-designed,

end-to-end control

environment

governing credit

data oversight,

compilation,

monitoring, and

reporting is

essential.

Placing this responsibility within the credit risk organization is one

way to efficiently leverage credit data expertise across the broader

bank platform.

Reporting Credit Data

Oversight

CompilationMonitoring


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The Credit Risk Council supports

professionals who are responsible for

establishing, maintaining, or carrying

out credit risk management policies.

The council focuses on funded and

off-balance-sheet risk management,

including capital markets activity, and

other forms of credit intermediation

and risk mitigation.

About RMA’s Credit Risk Council


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For additional information about

credit risk management,

visit

www.rmahq.org/credit-risk/

LEARN MORE

http://www.rmahq.org/credit-risk/


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SHARE THIS PRESENTATION

Visit http://www.rmahq.org for information on risk management.

RMA is a member-driven professional association whose sole

purpose is to advance sound risk principles in the financial services

industry.

RMA helps its members use sound risk principles to improve

institutional performance and financial stability, and enhance the risk

competency of individuals through information, education, peer

sharing, and networking.

Become a member today.

http://www.rmahq.org/

http://landing.rmahq.org/membership

winning tactics for data governance

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