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News

Accurate Analysis Required at Financial Service Organisations to Eliminate Potential for Hidden Risk

Datanomic : 16 February, 2010  (Technical Article)
Datanomic provides explanation of the requirement for forensic analysis in banking and financial organisations of data residing across multiple silos to reveal risks and eliminate the potential for data loss and fraud related incidents
Financial services organisations must update the way they validate underlying core data to mitigate risks hidden in the multiple data silos across their systems, according to compliance and data management specialists, Datanomic. As the Bank for International Settlements gathered top central bankers and financiers for a meeting in Basel last month amid rising concern about a resurgence of the "excessive risk-taking" that sparked the financial crisis, there is a need for greater focus on existing data reporting techniques.

With Loan-to-Value calculations, Basel II, Solvency II, Liquidity Risk Management and pensions information all directly reliant on data held in an organisation's systems, major risk factors are being overlooked as a result of underlying core data not being properly validated.

"Financial services organisations are being confronted with new reporting challenges," said international Risk Management expert, Mike Hamm. "New regulations mean organisations must assess cash flow and liquidity on a daily basis and have the ability to report on it. It is imperative that this data is accurate, consistent, reliable, and accessible if companies are to gain a true understanding of what's happening on an enterprise-wide basis. It also means they must automate this process as the latency time is much shorter. It's an enormous challenge and it is simply unrealistic to rely on manual efforts to access, validate and analyse disparate data sources and then stress test it within such a short time frame. Organisations must be able to get to the granular level, and gain a holistic view on what is happening across the entire organisation or they are operating blind."

Jeremy Lovett, Vice President, Data Management Applications Division for Datanomic, added, "Financial services organisations have been taking the same approach to data reporting for the past ten years, yet systems and reporting requirements have changed dramatically. It is imperative to be able to forensically analyse data, and have the ability to validate the underlying data itself - not just at the software application level. Clustering and fuzzy matching techniques enable organisations to gain better insight into data at a granular level, and the associated risks and information hidden in their systems. By taking a forensic approach to data analysis, in a 90 minute QuickStats Workshop using our dn:Director application, we can work with organisations to see where and why the problems in data are occurring."

Usually, the tools applied to validate and verify underlying core data are typically technical in nature and aimed exclusively at IT-literate personnel. However, the dn:Director software facilitates a business application view of the problem, enabling companies to collaborate and interrogate their data at the business level. Barclays is one example of a major high street bank that has already adopted dn:Director to assist its risk mitigation and compliance reporting efforts.
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