Data Quality: The Forgotten Risk

While investment in efficient risk management systems is rocketing, the data feeding the systems is often overlooked. Firms simply forget that best-of-breed risk management systems rely on good quality data. Carla Mangado examines the impact of faulty data on risk calculations.

Risk management was voted the top priority of senior financial executives in an informal poll taken at the 2008 Sybase Executive Summit held in New York in May. Data quality, however, traditionally comes quite low on managers’ tick sheets. And yet good quality data is essential for efficient risk management systems.

Reference data professionals have been trying to convey this message to senior management for several decades, but it seems they are finally starting to be heard. At the North American Financial Information Summit in New York, endusers said more people are starting to say ‘hi’ to them in the elevator in the morning. The industry is becoming increasingly aware of the negative impact of faulty data, and more firms are beginning to realize that poor data is the root cause of many of the issues highlighted by the recent market turmoil. But a ‘hi’ is not enough. The problem of poor data may result in a much greater challenge than expected - and few want to take ownership of it.

View whole article (PDF)