Effective Data Strategies for Risk Management<br />
Top Nine Risks An FI Fears<br />
COSO’s Framework For Enterprise-wide Risk Management (ERM)<br />
How Has ERM Progressed?<br />Surveys referred to: <br />
Survey Results - I<br />Question: To what extent do you agree or disagree with the following statements regarding ERM?<br ...
Companies seem to have integrated risk management with their strategic planning process more in 2010 than 2008</li></ul>So...
Survey Results - II <br />Question: How important are each of the following in driving improvements in your company’s risk...
Survey Results - III<br />Question: To what extent is technology used to enable the following elements of the risk managem...
Finally, ERM was said to have more room for improvement in 2008 and is definitely seen in positive light now despite a lon...
After the crisis, what does the  Industry believe about ERM?<br />
Extracts from an independent survey from 2010<br />For a successful ERM Program, the following attributes were recognized ...
A dedicative executive in a senior level position who drives and facilitates the ERM process
An ERM culture that encourages  full engagement and accountability at all levels of the organization
Engagement of all stakeholders in risk management strategy development and policy setting
Transparency of risk communication
Integration of financial and operational risk information into decision making
Use of sophisticated  quantification methods to understand risk
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Data strategies for risk management

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Data strategies for risk management

  1. 1. Effective Data Strategies for Risk Management<br />
  2. 2. Top Nine Risks An FI Fears<br />
  3. 3. COSO’s Framework For Enterprise-wide Risk Management (ERM)<br />
  4. 4. How Has ERM Progressed?<br />Surveys referred to: <br />
  5. 5. Survey Results - I<br />Question: To what extent do you agree or disagree with the following statements regarding ERM?<br />2008<br />2010<br />Take Away<br /><ul><li>Companies seem to have their objectives/risk appetite and tolerance clearly articulated more in 2010 than 2008
  6. 6. Companies seem to have integrated risk management with their strategic planning process more in 2010 than 2008</li></ul>Source: 2008 and 2010 Treasury and Risk ERM Survey<br />
  7. 7. Survey Results - II <br />Question: How important are each of the following in driving improvements in your company’s risk management programs or initiatives?<br />2008<br />2010<br />Take Away<br /><ul><li>Companies seem to be moving away from defensive risk management practice to more pro-active risk management with more of them citing business value enhancement, decreased volatility in earnings, gaining competitive advantage amongst others as their prime driving forces</li></ul>Source: 2008 and 2010 Treasury and Risk ERM Survey<br />
  8. 8. Survey Results - III<br />Question: To what extent is technology used to enable the following elements of the risk management process?<br />2008<br />2010<br />Take-away:<br /><ul><li>Technology in 2010 has enabled more companies in their risk identification, analysis, quantification, reporting and monitoring than in 2008. But , if not designed, implemented and managed correctly, the technology used to measure risk will itself pose a major operational risk!!!
  9. 9. Finally, ERM was said to have more room for improvement in 2008 and is definitely seen in positive light now despite a long recessionary period.</li></ul>Source: 2008 and 2010 Treasury and Risk ERM Survey<br />
  10. 10. After the crisis, what does the Industry believe about ERM?<br />
  11. 11. Extracts from an independent survey from 2010<br />For a successful ERM Program, the following attributes were recognized to be critical:<br /><ul><li>Board level commitment to ERM is critical for successful decision making and for driving value.
  12. 12. A dedicative executive in a senior level position who drives and facilitates the ERM process
  13. 13. An ERM culture that encourages full engagement and accountability at all levels of the organization
  14. 14. Engagement of all stakeholders in risk management strategy development and policy setting
  15. 15. Transparency of risk communication
  16. 16. Integration of financial and operational risk information into decision making
  17. 17. Use of sophisticated quantification methods to understand risk
  18. 18. Identification of new and emerging risk from internal data as well as from information from external providers
  19. 19. A move from risk avoidance and mitigation to leveraging risk and risk management options to extract value</li></ul>Source: Global Enterprise Risk Management Survey, 2010, AON Analytics<br />
  20. 20. What do experts say?<br /><ul><li>“Objective of implementing an ERM is to have a unified platform that operates in a standard framework for risk management that covers all leading financial risks such as market, credit, liquidity and operational risk”
  21. 21. “In the past, banks have done the business and then went about measuring risk; now, it is necessary to measure risk and use the knowledge to do the business.”</li></li></ul><li>Sources and users of Data in an FI<br />External Reporting<br />Internal Reporting<br />Users<br />FED<br />SEC<br />OTS<br />FDIC<br />T&F<br />BOARD<br />ALCO<br />CRM<br />PC<br />DATA TO IN FORMATION<br />Basel II/III<br />Investor Relations<br />Economic Capital<br />Budgeting & Control<br />Customer & Product<br />Profitability<br />FTP<br />Budget & Forecast<br />Ops Risk<br />Credit<br />ALM<br />Market<br />Business Calculators<br />Integrated Risk Engines<br />DATA<br />Guarantor<br />Market<br />Collateral<br />Contract<br />REF<br />Customer<br />Sources<br />Product<br />External Websites<br />GL<br />In-House<br />Rating<br />
  22. 22. Typical Pain Points – A Business User’s perspective<br />
  23. 23. Primary Attributes of Quality Data<br />Accurate<br />Fit For Use<br />Timely<br />Complete<br />DATA<br />
  24. 24. Data Quality Process<br />
  25. 25. Data management approach for effective Risk management <br />Combination of top- down and bottom-up approach<br />Data availability in various source systems - risk, finance<br />Ownership of data problems<br />Defining Target State<br />Methodology<br />Pillar II, Basel III, liquidity risk and stress testing<br />Data classification issues<br />Establish data governance framework<br />Identifying periodicity, latency issues and data flow<br />Sourcing of Data<br />Pre-cursor to Implementation<br />Organization Structure<br />Data Requirements<br />Impact of non-availability of data <br />Data standards/ definition/<br />Metadata<br />Identifying appropriate data sources/owners of data<br />Design of data architecture<br />Data Governance<br />Data quality assessment<br />Policies, processes and standards<br />Data Gaps, <br />reconciliation <br />Roadmap for implementation<br />
  26. 26. Data Quality Solution<br />A combination of Business Processes/Methodology and Data Quality Tools<br />Collateral /Limit Management Systems<br />Transaction Systems<br />Multiple Customer Information Stores<br />Risk & Reporting Engines<br /><ul><li>Identify data sources
  27. 27. Identify data source champions
  28. 28. Profile data sources
  29. 29. Identify Golden Source for each information domain
  30. 30. Pick relevant attributes from other available sources
  31. 31. Incorporate Data Quality checks
  32. 32. Set up feedback systems for review of rejected data</li></ul>Data Warehouse<br />Multiple Product Information Stores<br /><ul><li>Reconciliation Process
  33. 33. Identify mismatches
  34. 34. Feedback
  35. 35. Resolve</li></ul>Multiple Issue Rating Systems<br />Multiple GL Systems<br />
  36. 36. Thank You<br />

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