Leverage OFSAA to build cohesive data!
Guest post by
Bhuvaneswari Venkataraman, Principal Consultant, Infosys
Supervisors in financial institutions worldwide recognise the challenges in aggregating risk data during risk reporting. To elaborate this further, let's take a simple scenario. During a Supervisory Audit in a Bank, the report 'Basel II controls for Corporate Lending' showed Loan balances and record counts at different points in a data flow, however the numbers were different at each point. The author of the report claimed that the figures were meant to be different at each stage, as data was transformed, aggregated and filtered. However, there was no explanation for the calculations done during processing or for the items that had been excluded. There was no way to drill down to data elements that could be added back to match the totals in the aggregated data reflecting lack of confidence and difficulty in auditing the numbers.
To overcome these problems, the Financial Stability Board (FSB) recommends several principles (Reference: http://www.bis.org/publ/bcbs239.pdf) emphasising the need for upgraded risk data aggregation and risk reporting practices which would enable banks to not only comply effectively but also strengthen their governance. The main recommendations from the FSB are:
- Overarching governance and infrastructure
- Risk data aggregation capabilities
- Risk reporting practices
- Supervisory review, tools and cooperation
It is evident from above that principles are coupled with each other and in a way one leads to the betterment/improvement of the other. Interesting questions arise here as to
- What could be a workable solution which covers the above principles?
- Where should be the fundamental focus?
- What are they key elements and how should they be driven?\
Typically for any bank, there are always multiple systems (internal as well as external) generating complex feeds in various formats, having huge volumes and different attributes leading to the problems of 'inconsistent reports' due to varying interpretation of data and 'Errors' due to partial view(s) of the dataset.
The clear un-disputed answer to address above questions and problems is 'Data' and the magical ways and means of integrating it into a single source of truth, which can then be analysed to fulfil Management, Statutory, Regulatory, and Governance Reporting requirements. The solution is formation of an integrated data repository of all financial and non-financial transactions, unified set of positions, accounts, customers and other dimensions, real time market data etc., providing a rich set of financial information supported by robust controls. The key control feature here being Data Assurance which encompasses aspects of Data quality and Data Reconciliation.
Oracle provides such a solution through its integrated Application Suite OFSAA (Oracle Financial Services Analytical Applications) for financial services Institutions. This has an underlying Data warehouse layer - Oracle Financial Services Data Foundation (OFSDF) encompassing all the tools and objects necessary for overcoming the above issues. It is composed of a Universal Data Model with pre-built, expandable and Scalable Data Marts along with a comprehensive, data optimised Common Staging Layer. It is further augmented by frameworks such as Data Integrator, Data quality, Data Reconciliation and offers a suitable platform for financial institution to build an integrated Finance, Risk, Treasury and Customer Repository of data. A plethora of proprietary modules under Enterprise Risk, Enterprise Performance, Governance, Risk and Compliance categories fulfil the need of complex analytical modelling and deriving knowledge from processing this data. An Overarching Business Intelligent layer provides the much needed pre-packaged reports which are commonly sought after. This provides a complete solution which clearly helps in gaining a competitive advantage.
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