Data is the bedrock of risk information. A financial institution that has accurate, high-quality data can make decisions from a well-informed position. Executives and non-executives can have confidence in the information that they are provided, and this feeds through into a sustainable strategic advantage for the company.
There are several important reasons why data has been elevated as a topic for boardroom discussion:
- The role of the Board in financial institutions has come under intense scrutiny. There is therefore a much greater emphasis being placed on the information that is passed to Boards for review.
- Data is increasingly seen as a strategic asset that can be used to optimize decision-making. Companies that have a high degree of confidence in their data are better able to take decisions from a well-informed standpoint.
- Many Boards have also realized that data not only supports decision-making under normal circumstances, but also enables the institution to respond quickly and effectively to crisis. Institutions that are able to calculate their exposure quickly are in a much better position to unwind their positions and limit their losses.
- The changing scope of regulation also influences the degree to which Boards are focusing on data issues. It’s likely that regulators for financial institutions will be required to make risk exposure data available as it is needed.
In combination, these trends are encouraging a broad re-think of the Board’s roles and responsibilities for data issues. Rather than see data as an operational issue that is the responsibility of the IT department, there is a growing realization that it should be thought of as an asset that has fundamental strategic importance. As such, it requires much greater boardroom discussion and oversight than may previously have taken place. For more information about leveraging your data at the board of director or executive level, download this white paper.
Has your firm changed the way it handles data since the financial crisis? Have you added a CDO (Chief Data Officer) to the executive branch? If so, what was the reasoning and what has the outcome been?