Trillium software garp march 2014 presentation bfast briefing

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Stressed Times for Stress Test: Take Control of Data, Avoid Regulatory Panic

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Trillium software garp march 2014 presentation bfast briefing

  1. 1. STRESSED TIMES Take Control of Data, Avoid Regulatory Panic Presented by: Jon Asprey – VP, Strategic Consulting
  2. 2. 2 The increasing risk and compliance workload STRESSED TIMES The data mountain • Increasingly frequent submissions & requirements for more granular data • Better data quality needed to avoid month end panic • CCAR 14 M – Monthly submission, 300 + attributes The IT bottleneck • IT does not provide visibility or flexibility needed • Clarity and access regarding data feeds required • Business needs results in a week, IT suggests 3 months The data governance need • Risk & compliance teams require direct data access to identify data/process issues • Supports & drives better governance and control • BCBS – Risk Data Aggregation – 11 principles
  3. 3. 3  Financial firms strive for process efficiency and automation to reduce risk  Data defects are indicative of (and cause) process breaks Front office Operational database Data warehouse Finance & accounting Treasury (Liquidity reporting) Risk (Credit Risk – Reg reporting) Finance & accounting (Month-end processing) Confirmations & clearing Manual intervention Reconciliation Reconciliation Remediation Remediation A “hidden factory” is born to deal with exceptions – RISK is introduced DATA DEFECTS – THE DOMINO EFFECT The downstream impact is multiplied
  4. 4. 4 Observations from our client engagements KEY OBSERVATIONS • Determining roles, authority & accountability are critical • A defined process must then be articulated Establish organization & process • Detailed data insight is required to uncover issues • Collaboration and review of evidence with SME’s critical Define Standards • Transparency is expected by regulators • Cultural barriers and fear must be addressed • Benefits extend beyond compliance Provide visibility
  5. 5. 5 Regulators increasingly interested in principles of data governance 1. ORGANIZATION & PROCESS Executive Group Management Group Working Group Portfolio SMEs Business Analysts Data Analysts Data Governance Board Responsible Exec Data Steward • Demonstrate to regulators & internal stakeholders that proper processes and procedures are in place • Framework for measuring and monitoring data quality needed • Executive level ownership & accountability for dealing with issues • Defined roles and standards required
  6. 6. 6 Engagement and iteration needed 2. DEFINE STANDARDS  To develop a dictionary you must know what the data contains (baseline profile)  Update business rules and data dictionary accordingly  Monitor and report, refine periodically Data profiling identifies potential defects Review anomalies with Experts (SMEs) Adjust and refine rule based on feedback & document Policy No Gross written prem Pol Inception Dt Risk Cat PX2344343 23000.00 01/05/2012 MAR PX2344344 0.00 01/01/2199 XXX PX2344345 15/05/2012 AUT Policy No Gross written prem Pol Inception Dt Risk Cat PX2344343 23000.00 01/05/2012 MAR PX2344344 0.00 01/01/2199 XXX PX2344345 15/05/2012 AUT Policy No Gross written prem Pol Inception Dt Risk Cat PX2344343 23000.00 01/05/2012 MAR PX2344344 0.00 01/01/2199 XXX PX2344345 15/05/2012 AUT Gross written premium should always be populated Zero and blank values are identified Exceptions noted, genuine defects validated
  7. 7. 7 Visibility and transparency required 3. PROVIDE VISIBILITY • Senior level management need more visibility into data quality • Transparency and communication are key • Benefits extend far beyond compliance requirements • Dashboards drive and monitor data remediation • Senior level management need more visibility into data quality • Transparency and communication are key • Benefits extend far beyond compliance requirements • Dashboards drive and monitor data remediation
  8. 8. 8 Case study – CCAR Monthly submissions (North American Bank)
  9. 9. 9 Background and context of the CCAR 14M challenge CCAR DATA ASSURANCE Multi-step process to prepare, review and test files prior to submission to Federal Reserve Board Source systems Data Extraction & ETL Aggregation & staging Pre - Submission Reconciliation, review & attestation Data aggregator (FRB appointed) Federal Reserve Board Submission The business challenge • Client required solution to provide data assurance around data submission and attestation • Risk team required to be able to update rules and deploy changes in hours not weeks • Monthly execution of 300+ rules with up to 2 rule-set updates per month
  10. 10. 10 SOLUTION APPROACH Overview of CCAR process at a US bank
  11. 11. 11 Measureable business improvement BENEFITS & IMPACT OF THE SELF- SERVICE DATA ASSURANCE APPROACH • Over 25 Risk users trained & provided access in 3 months • Over 2000 business rules built to date • Centre of excellence forming Adoption was rapid & transformative Automation & reduced reliance on IT • Teams able to react to the rapid and changing demands of the FRB and aggregators • Turn around times of days not weeks • Focus on automation and repeatability Providing added assurance for attestation • Greatly improved transparency • Business level access to exposure - level data • Supporting current attestation process as evidence of best practice
  12. 12. 12 Benefits of the self-service model CONCLUSIONS Definition and structure from the regulator is helpful Business empowerment and data “transparency” is critical Self-service data assurance environment Business SMEs Risk analytics Pre - Submission Volume of data and frequency of rule changes are prohibitive Dashboards Data “drill-down”
  13. 13. 13 Fundamental concepts needed but business enablement is key IN SUMMARY TO SUCCEED… Establish organization & process Define Standards Provide visibility Business SMEs Data access, assurance & enablement Underpinned by There is business value upside as well as regulatory compliance
  14. 14. 14  Jon Asprey – VP, Strategic Consulting jon_asprey@trilliumsoftware.com www.trilliumsoftware.com @jon_asprey For further information contact THANK YOU & QUESTIONS

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