Chaotic Market Conditions
Many problems that plague the industry were directly attributable to poor underwriting and faulty or missing data. Although capital is at risk, the real risk is the uncertainty and lack of trust in the key performance indicators (KPIs):
- Economic Capital
- Probability of Default
- Exposure at Default
- Related information that drives decision-making
New measures are being designed to bring transparent and provably correct processes for validating the data that underpins "information" generated by risk calculation models.
Incorporating inaccurate data into the calculation stream introduces unknown risk that resonates throughout risk management initiatives.
Consider the myriad of data that underpins KPI calculations:
- customer credit quality measurements
- agency debt ratings
- accounts receivables
- current market exposures
When data is spread out over multiple systems, different data standards, formats, and naming conventions hamper the reconciling of individuals and businesses that have outstanding debt. These data problems also impact downstream default probability calculations. All these exposures can add up to a hefty Economic Capital investment.
Know Data is Correct and Prove It
Trillium Software's DIG solution not only provides foundation processes for enterprise governance of risk and risk modeling data, but also a framework for establishing the context of data veracity within the business that leverages software and services to identify, collect, and assess the key data sources, attributes, and rules that need to be validated to ensure the accuracy of risk data and the precision of associated risk models and reported KPIs.
More About DIG
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