Max Bowie: Are You a Governator?

Perhaps more than ever, at this year’s European Financial Information Summit, hosted by Waters stablemates Inside Market Data and Inside Reference Data, data quality and governance was high on the agenda, not just in the reference data stream, but also among market data executives tasked with reducing costs and eliminating duplication within datasets.

In the past, these tasks fell to market and reference data managers, though more recently—and spurred by pioneers such as John Bottega and Peter Serenita—firms have appointed chief data officers with overall responsibility for data governance throughout their organizations. What’s the difference, you ask? In my understanding, a government governs, which means enforcing policy; while various arms of local government or agencies manage—by which I mean they manage the implementation of what the government dictates. So the concept of data governance first needs to come from the top—i.e. C-level executives and a company’s board—before its implementation can be managed by those in the trenches.

Slight Difference
However, these CDOs look at the position slightly differently: Being responsible for all data, they say, doesn’t mean they’re the only one who needs to worry about—or take responsibility for—data quality. Indeed, many see their role as an evangelist of processes and best practices to the rest of their firms, including their boards of directors.

In fact, some data management professionals dislike the CDO role because it makes firms think that appointing one person will miraculously solve their problems. “At a board level, responsibility has to reside with all of the leadership,” said Julian Dorado, director of data management at M&G Investments, adding that the practice of appointing one person to lead data governance mistakenly encourages other executives to neglect their data management duties, believing that the CDO will take care of it,  whereas “it really needs to be across the organization.”

If there was one clear message repeated again and again throughout the event, it was that appointing a CDO does not solve the problem, but merely reflects the fact that a firm recognizes it has a problem and is taking the first step toward a solution. One person alone cannot solve a firm’s data quality issues; rather, the responsibility must lie with each and every employee who touches the data—creating a “data culture” and effectively making everyone a data scientist of sorts, said Capgemini’s Zhiwei Jiang, who gave a presentation at the event—while the ultimate responsibility must be shouldered by a company’s board, who should be prepared to be actively involved in (and concerned about) the accuracy of data that drives decisions they sign off on.

Responsibility for data quality must lie with each and every employee who touches the data, while the ultimate responsibility must be shouldered by a company’s board.

Questionable 
Here’s the thing: Without good data governance processes, it’s harder to control your datasets and understand the quality of your data. If you can’t verify your data’s accuracy, you should assume it is questionable. And if your data is questionable, then so is everything ranging from trades and portfolio valuations to the profit-and-loss (P&L) figures by which management sets strategy—not to mention other important activities, such as client reporting and relationship management. Then, of course, there’s the data required to comply with new regulations and reporting mandates, which especially needs to be accurate. 

“Let’s not underestimate the challenge of complying—but it’s difficult because of where we’re coming from, not because of what it is,” said Chris Bannocks, chief data management officer at ING Bank, who spoke on a panel at the conference.

With all this at stake, the question is not whether you can afford to make the investment in data governance projects, no matter how arduous and expensive, but whether you can afford not to. W