The first principle of the Basel Committee on Banking Supervision’s Standard No. 239, titled “Principles for Effective Risk Data Aggregation and Risk Reporting,” pertains to the idea of robust data governance. According to this principle, a bank complying with BCBS 239 must be in possession of strong data governance arrangements for its risk data aggregation and risk reporting practices. In the context of banks that want to adopt BCBS 239 and other similar regulations, what does data governance mean, and how can a bank acquire a solid data foundation for purposes like compliance reporting?
For those in the banking industry that have yet to learn more about data governance, it is defined as the systematic collection of standards, metrics, processes, and policies about data assets so that an organization can use information to fully realize its goals. Data governance is an integral part of the overall discipline of data management, as it is concerned with the oversight of the discipline’s other aspects like data architecture, data security, data integration and interoperability, and data modeling and design.
The overall body of practices that constitutes full data governance results in the following benefits for banks:
- Quality data, which is compiled in a timely manner throughout the entire data lifecycle;
- Up-to-date consolidation and reconciliation of data, even amidst complex data computations and increasingly complex data environments, and;
- Greater ease when managing data that correlates to finances, risk, and compliance.
Your bank will have achieved full data governance upon securing both full confidence and full control of your data foundation. To help you realize full data governance for the regulatory standards that demand it—as well as prepare your bank for a data-driven future in the industry—here are some brief, but important tips.
Upgrade Your Tech Stack for Your Bank’s Data Management
One of the quickest ways that you can get your bank up to speed is to upgrade to a new data management solution. Upgrading to a more advanced solution will afford you a 360-degree view of your bank’s data, which is definitely a requirement for full data governance. You’ll also benefit from powerful analytics capabilities that will allow you to align finance data with risk data, as well as features like dashboards which will make oversight much easier.
Assign Roles to Oversee Data Governance in Your Organization
A big part of effective data governance lies in ensuring that the right people take charge of the right data responsibilities for the organization. That’s why you’ll also want to supplement any upgrades to your data management technology with the expertise and dedication of a data governance team. Designate banking staff to lead you in your journey towards full data governance, and put them in charge of goal-setting for your organization’s data management.
Create a Business Glossary for All Things Related to Standardization
When you start adopting new data governance protocols and policies for the sake of compliance to BCBS 239 and other related standards, you’ll realize how difficult it may be to keep track of all the unique terms. It will be a wise move on the part of your organization to compile a business glossary for all terms related to data governance standards. Use your data governance system to familiarize everyone with the various definitions involved in the integration of key data elements. That, of course, will make these data elements easier to manage.
Determine the Controls for Every Data Element Involved
In order to achieve full data governance, you need to be able to survey your data with the right quality controls and the right operational controls. The former will ensure a system for acquiring the accurate, high-quality, and high-integrity data that’s needed for purposes like BCBS 239 compliance. The latter will allow your team to check the operational procedures that will yield you timely data, even as you navigate through increasingly difficult computational processes and environments. If you are able to use your data governance system to fully implement these controls, much of the battle will have been won.
Be Consistent About Monitoring Data Elements
Lastly, once you’ve got data governance controls in place, the next step is to strive for consistency in monitoring the data elements and tracking relevant trends or variances. This will help you compile reports which are fit for your regulators, and which will give them confidence in your bank’s data foundation. Show your regulators that you have an organized and trackable system for all the data elements involved in your compliance, and you’ll have secured some valuable trust in your institution.
Conclusion: The Rewards of Achieving Full Data Governance for Your Banks
The road to full data governance may be a challenging one, but once it’s achieved, it has its rewards. The most obvious one is that your bank will be better equipped to meet BCBS 239 and other related regulatory standards. But this added mastery over your data management will also allow you to be smarter about risk, and more agile about incorporating risk into your strategic decision-making.
Foresight, agility, and resilience are all things that you want for your bank as the industry moves toward a data-driven future. Future-proof your bank’s data strategy by putting your efforts behind full data governance!
