The importance of – and case for – data quality and effective risk management and governance in financial services has once again been reinforced – this time by the European Central Bank, in their Single Supervisory Mechanism priorities for 2016.
The ECB has adopted 5 “high-level priorities” for its supervision in 2016, with an aim to “ensure that directly supervised banks address key risks effectively.”
The 5 priorities:
- Business model and profitability risk
- Credit risk
- Capital adequacy
- Risk governance and data quality
In reference to risk governance and data quality, the ECB outlines that banks’ risk governance will be assessed “against low profitability and resulting search-for-yield behaviour, paired with cheap and ample funding provided by central banks”.
Referring back to the financial crisis, they confirm the importance of management boards having the right risk information available to make “sound business and risk management decisions”.
From a data quality perspective, this is the second time in as many months that we have had its importance explicitly outlined, with the Bank of England’s stress testing results announcement in December singling data quality out as key component of implementing successful stress testing regimes and vital to have as a foundation.