Data Management - Future Proofing For Success
The financial services industry has never been under a brighter spotlight or stronger microscope than it has been for the past year. Everywhere you turn there is someone or some organisation making demands towards greater regulation to control or monitor risk. At the same time, firms have begun to recognise that if they look after their own affairs before they are mandated by someone else, they will inevitably help themselves to avoid the fate of others no longer with us. Managing the new world risk challenges that they face demands that the data management work needed for tomorrow's business is started today.
A key challenge to effectively managing risk and exposure is undoubtedly data management. Custodians and regulators alike agree that the inconsistencies in the myriad of systems out there can cause dissemination issues that ultimately make it extremely difficult to calculate an organisation's overall risk or exposure level. As we move forward, firms will be expected to produce reports that detail the number of positions held, the value of those positions, as well as a great deal of analytical information about all of this, including geography and asset class. Think about that for a second - quotes, trades, phone calls, instant messages, news releases, etc. - the amount of information required is breath-taking. And when regulators get involved in the process, that amount is only going to increase, as they start looking at counterparty risk with an even finer tooth comb.
Without a doubt, system-wide data is critical to monitoring systemic risk. Some firms are collecting this data already - but many firms are not. And even within those firms collecting information, there is not real appreciation or understanding for the accuracy or relevance of the information they are collecting. The true challenge for companies in the future is to find a solution that addresses the sheer enormity of the problem. Systems must not only be open and easily integrated with each other but dynamic as well, because models and analytics will continue to evolve
So what is it that firms can do to prepare themselves for the new world of financial services? How can they ready themselves for what lies ahead? The answer undoubtedly lies in communication. Communication and access to information across an organisation is the key to managing risk levels and understanding the scale of any potential exposure to risk. Interdepartmental communication, led by management, will help to develop a cooperative culture that shares information and helps avoid significant errors or omissions which are then reflected in a much more positive balance sheet.
It is a commonly held belief that there should be an industry-wide strategy on risk exposure. But this will not happen if the lines of communications that should provide more reliable information about total risk exposure are not developed and maintained. Technology, with adaptable models that change as the landscape does, must also exist and be allowed to work together.
If a firm is to strengthen its resilience in response to changes or adjustments in market conditions, it will need to ensure that it develops the right approach to data management. Some of the more recent events in the industry have forced companies, who previously thought that they had a strong DM policy, to re-examine what they have been doing. By understanding the main factors that were responsible for the policy being created in the first place, these companies can then adjust their processes to meet the demands of the new world order. And it allows them the option to future proof their efforts by addressing the question of flexibility. The solutions they create today must be flexible enough to work with the expected changes to the landscape tomorrow.
For companies currently without a strategy, a blank canvas allows them to create an infrastructure whereby data is gathered from multiple sources, without any predisposed limitations or restrictions. This then becomes a unique opportunity for them to map a complete picture for all parties - senior management right through to the industry regulators -and provide a firm with real-time visualisation of exposure. It will also give a firm flexibility to adjust to any changes or modification to the system that will be brought in over time.
In some instances, it is not difficult to anticipate what changes the regulators will be requesting. Extending platform support for unstructured data along with the recording of time series data will undoubtedly be required and preparing for and developing a data management system that is prepared to deal with these types of changes is key to a successful future.
In some instances the process involved in creating this new strategy will reveal areas where a new approach will result in a much more efficient operation. Couple this with the improved levels of communications that develop across the organisation and you have the recipe for success at your fingertips. Senior management will want answers about certain risk issues even before the regulators do, so developing the ways and means to provide these answers has never been more paramount
But let's not put the cart before the horse. The first steps are the most important. If a firm can't properly and accurately collect key data - down to point of first engagement, then the value of that information is flawed, its intrinsic value reduced and overall usefulness subject to further scrutiny by all. The commitment to collecting and sharing data through a flexible, up to date and user friendly system, backed by a top down adoption of clear, concise reporting methodology and the capability to communicate across the entire enterprise, is the key to managing a successful and future proof data management strategy.
Article Source: http://EzineArticles.com/6101161
A key challenge to effectively managing risk and exposure is undoubtedly data management. Custodians and regulators alike agree that the inconsistencies in the myriad of systems out there can cause dissemination issues that ultimately make it extremely difficult to calculate an organisation's overall risk or exposure level. As we move forward, firms will be expected to produce reports that detail the number of positions held, the value of those positions, as well as a great deal of analytical information about all of this, including geography and asset class. Think about that for a second - quotes, trades, phone calls, instant messages, news releases, etc. - the amount of information required is breath-taking. And when regulators get involved in the process, that amount is only going to increase, as they start looking at counterparty risk with an even finer tooth comb.
Without a doubt, system-wide data is critical to monitoring systemic risk. Some firms are collecting this data already - but many firms are not. And even within those firms collecting information, there is not real appreciation or understanding for the accuracy or relevance of the information they are collecting. The true challenge for companies in the future is to find a solution that addresses the sheer enormity of the problem. Systems must not only be open and easily integrated with each other but dynamic as well, because models and analytics will continue to evolve
So what is it that firms can do to prepare themselves for the new world of financial services? How can they ready themselves for what lies ahead? The answer undoubtedly lies in communication. Communication and access to information across an organisation is the key to managing risk levels and understanding the scale of any potential exposure to risk. Interdepartmental communication, led by management, will help to develop a cooperative culture that shares information and helps avoid significant errors or omissions which are then reflected in a much more positive balance sheet.
It is a commonly held belief that there should be an industry-wide strategy on risk exposure. But this will not happen if the lines of communications that should provide more reliable information about total risk exposure are not developed and maintained. Technology, with adaptable models that change as the landscape does, must also exist and be allowed to work together.
If a firm is to strengthen its resilience in response to changes or adjustments in market conditions, it will need to ensure that it develops the right approach to data management. Some of the more recent events in the industry have forced companies, who previously thought that they had a strong DM policy, to re-examine what they have been doing. By understanding the main factors that were responsible for the policy being created in the first place, these companies can then adjust their processes to meet the demands of the new world order. And it allows them the option to future proof their efforts by addressing the question of flexibility. The solutions they create today must be flexible enough to work with the expected changes to the landscape tomorrow.
For companies currently without a strategy, a blank canvas allows them to create an infrastructure whereby data is gathered from multiple sources, without any predisposed limitations or restrictions. This then becomes a unique opportunity for them to map a complete picture for all parties - senior management right through to the industry regulators -and provide a firm with real-time visualisation of exposure. It will also give a firm flexibility to adjust to any changes or modification to the system that will be brought in over time.
In some instances, it is not difficult to anticipate what changes the regulators will be requesting. Extending platform support for unstructured data along with the recording of time series data will undoubtedly be required and preparing for and developing a data management system that is prepared to deal with these types of changes is key to a successful future.
In some instances the process involved in creating this new strategy will reveal areas where a new approach will result in a much more efficient operation. Couple this with the improved levels of communications that develop across the organisation and you have the recipe for success at your fingertips. Senior management will want answers about certain risk issues even before the regulators do, so developing the ways and means to provide these answers has never been more paramount
But let's not put the cart before the horse. The first steps are the most important. If a firm can't properly and accurately collect key data - down to point of first engagement, then the value of that information is flawed, its intrinsic value reduced and overall usefulness subject to further scrutiny by all. The commitment to collecting and sharing data through a flexible, up to date and user friendly system, backed by a top down adoption of clear, concise reporting methodology and the capability to communicate across the entire enterprise, is the key to managing a successful and future proof data management strategy.
Article Source: http://EzineArticles.com/6101161
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