Data Management

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What Do Resolution Plans Say About Data Governance (Part 1)?

Close examination reveals that data governance plays an important role in financial firms' resolution plans, which are used to determine how a financial institution can unwind itself from a significant financial incident.

The Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve recently released the public sections of the annual resolution plans for eleven systemically important financial services firms. The plans describe the companies' strategy for rapid and orderly resolution in the event of material financial distress or failure.

While the plans vary widely in their approach and level of specificity, the framework provided by the regulators requires each institution to provide a "Description of material management information systems" as a separate section of the public summary. This allows an interesting opportunity to find out how these firms are approaching complex issues like risk management, management reporting and data governance through the lens of planning for worst-case scenarios.

One of the most explicit and comprehensive of these filings was provided by Citi. Below are several paragraphs from the publicly available portion of their report. Indicated in bold are some of the most important aspects – note that these highlights are not found in the document as filed:

Over the past three years, Citi has made made significant investments to provide the organization with the business capabilities and information at the level of granularity required to support decision-making and reporting needs. This effort has consisted of the implementation of a standards-based data architecture, adoption of consistent data management practices across the enterprise and a focus on data quality in order to provide the information to support business processes. Citi believes that these investments have resulted in substantial improvements in its material management information systems, and is evidenced by strengthened planning, monitoring, reporting and analytical business capabilities. In addition to supporting management's day-to-day needs, Citi has utilized its improved data management capabilities to support the information needs associated with resolution planning.

Citi recognizes that the effectiveness of its material management information systems and quality of the firm's underlying data rests on well-defined organizational accountabilities, processes and standards, and has adopted an enterprise-wide data management policy that governs the manner in which systems are built and operated. A key component of this policy focuses on the need to adhere to data standards and targeted data quality objectives. Citi supports this policy through the use of a standard enterprise data quality measurement and management program.

As part of its resolution planning preparation, Citi utilized and continued to enhance its systems capabilities to build a data and analytics tool that provides financial, operational and external relationship data across Citi's MLEs and CBLs. [Editor's Note: MLEs (Material Legal Entities) and CBLs (Core Business Lines) are terms defined by the regulators to govern the scope of reporting required for the resolution plans]. This tool leverages the standards-based data architect and is intended to make Citi's Resolution Plan a living plan with monthly and quarterly updates as well as to provide a streamlined method to answer questions relating to resolution. This tool incorporates the use of strategic data repositories, e.g. consolidated contracts, positions and balances information, and gives Citi and its regulators the ability to access the information that would be needed in a crisis situation. In addition, the functionality is an important strategic and analytic tool that supports Citi's ongoing processes.

Citi's filing also includes a description of their strategic data repository architecture and the relevant systems and capabilities built on that architecture. Further information can be found in this link to their filing.

Future articles will highlight findings from the remaining submissions, particularly with regard to risk management and data.

About The Author: Jennifer L. Costley, Ph.D. is a scientifically-trained technologist with broad multidisciplinary experience in enterprise architecture, software development, line management and infrastructure operations, primarily (although not exclusively) in capital markets. She is also a non-profit board leader recognized for talent in building strong governance and process. Her current focus is in helping companies, organizations and individuals with opportunities related to data, analysis and sustainability. She can be reached at www.ashokanadvisors.com.

Jennifer L. Costley, Ph.D. is a scientifically-trained technologist with broad multidisciplinary experience in enterprise architecture, software development, line management and infrastructure operations, primarily (although not exclusively) in capital markets. She is also a ... View Full Bio
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