Credit data management and governance remains one of the critical challenges facing risk managers. This excerpt from the RMA Credit Risk Council’s “2017 Industry Insights: Perspectives from the Front Line,” offers several insights into data governance.

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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 and
day-to-day management
of credit data itself
centralized within the
credit 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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Finance
In 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.
OWNERSHIP OF THE ETL PROCESS AND
RESULTING DATA PRODUCTION
Accounting
Loan
operations

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OWNERSHIP OF THE ETL PROCESS AND
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.
OWNERSHIP OF THE ETL PROCESS AND
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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CREDIT DATA IS COMPLEX AND REQUIRES STRONG
GOVERNANCE AROUND REPORTING (CONT.)
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.
CREDIT DATA IS COMPLEX AND REQUIRES STRONG
GOVERNANCE AROUND REPORTING (CONT.)
Standard
reporting
Ad hoc
reporting

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CREDIT DATA IS COMPLEX AND REQUIRES STRONG
GOVERNANCE AROUND REPORTING (CONT.)
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

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