RIMES offers index and benchmark data services, and also provides numerous tools that buy-side financial institutions can harness in creating the right set of policies and procedures or their crucial information. At the event, participants were introduced to the Best Practices Handbook, which contains information on data management and data governance approaches that firms have used successfully.
At the company’s third annual Edinburgh forum, RIMES elaborated on the various challenges that companies are encountering in their efforts to establish the best policies and procedures for their data. Many Performance, Data management, Risk or IT professionals know very little about data governance, while those who do often work for companies that have made limited progress developing a framework for the use of crucial data.
Additionally, many companies have not identified who is responsible for data governance. This can potentially result in problems, such as holding the same information in different formats and in separate places.
Firms that want to optimize their data sources can do so by harnessing RIMES reference data services. This will permit them to obtain a more cost-effective managed solution for security and reference data.
What is data governance?
The participants at the event indicated that they either do not know what data governance is or they struggle with explaining what it is. In addition, several respondents said that their company has not yet established the needed policies and procedures for guarding important information.
“I look after some performance measurement clients. As for data governance, I am not quite sure what it is. We use RIMES to feed us the benchmark data and index data. I came here to find out more about it,” said a participant from a major global asset manager.
Another representative revealed that people frequently don’t know what kind of data is coming in, what the KPIs are surrounding it, which can be problematic, particularly when determining where the information should go.
“There seems to be a lack of understanding as to what data governance is,” said the representative, who works for an Edinburgh-based asset manager.
Many companies and their employees are unsure about who actually owns the data and who is licensed to use it, and one attendee at the conference noted that the various challenges at her firm necessitate the need for a data governance framework.
“There have been incidents of data being used in places it shouldn’t,” she responded. “The information has been coming in and staffs have been using it everywhere, thinking they could do whatever they wanted with it. As a result, management realized that they needed to set up some controls and processes.”
Insights from The Best Practices Handbook
The Best Practices Handbook aggregates the data governance and management strategies that these firms have established. Although RIMES revealed that each company chosen to take part in the creation of the handbook enjoyed some degree of success, none of the organizations selected to participate had optimal practices in place to manage every facet of governance.
RIMES noted that the majority of firms were rather strong in terms of their data processing, but failed to put the needed due diligence into data governance.
“Even if we have a Data Governance project in house, I don’t think we are ahead of the curve. We have been looking at it since 3-4 years now, and the problem is the ownership of that project: we are trying to get a handle on what we need to do and where we need to go,” said one of the participants.
Many firms may conduct a project, get some control over the data, decommission the information and then shelve it. As a result, they do not take part in continuous ongoing control, although RIMES advocates such an approach.
What key factors are driving data governance initiatives?
Many variables are combining to put pressure on buy-side financial institutions to ensure that they have the right policies and procedures in place for their important information. These factors include:
- Cost: After the financial crisis, everyone is looking to lower their expenses. Doing so involves not only reviewing vendor relationships, but also assessing internal costs to make them more efficient.
- Increasing complexity: Benchmark data is always growing in volume and complexity. Many new risk management approaches are cropping up, which intensifies this situation. There are a lot of different data managers, so companies can leverage the services provided by RIMES to control the input of the data they use.
- Data usage: Companies can perform data acquisition very effectively, and often say that they negotiate effectively with vendors. However, once they have obtained this key information, the situation might not be as beneficial.
- Organization: Having a chief data office can have a huge impact on how a company leverages its crucial information. However, setting up one of these offices can restrict the access that business units have to important data.
While roundtable participants identified many challenges they are encountering, some respondents emphasized that they are making some important progress. For example, some individuals noted that their companies are working toward setting up a data governance framework. Firms that are looking to create order from the chaos can potentially leverage managed services such as those offered by RIMES.