Data Governance Blog

Risk Management – How much water is under the keel?

Tonight I witnessed a little entertainment over dinner. My home has a view over a channel off the Puget Sound near Seattle. Some poor soul ended up putting his very shiny sailboat hard aground not far from the house. They launched into a flurry of action, got the engine started, and finally had the presence of mind to douse the sails. This got me thinking about the importance of key risk metrics and the importance of keeping an eye on them (I’m weird like that).

You see most boats in this day and age have electronic depth finders. This very simple device is a key risk management indicator for operating a boat. Undoubtedly the skipper of the boat had no intention of running aground, but in the thrill of the moment (there were awesome winds at the time) he focused on short-term reward and ignored the key risk metric (water under the keel).

Our current economy is not unlike this situation. The skippers of finance companies were so focused on the short-term gains and the speed of the “boat”, they ignored their key risk metrics such as reserves. Granted this is not the only risk factor to consider, but it illustrates the point.

This is where data governance comes into play. The practice of data governance gives the captains of finance and industry confidence to make the right decision for their business. Companies with mature data governance programs are functioning with the equivalent of updated charts, and state of the art navigation tools. Those without a program are like the early explorers, and as memory serves a good portion of them found themselves on the rocks.