At times of financial crisis, stressed mergers and acquisitions within the financial sector often result in data chaos which can have a severely damaging effect on the efficacy of the integration of the newly conjoined organisations.

Accelerated acquisitions do not allow adequate time to identify ‘data blind spots’ or consolidate customer records using traditional methods. This may lead to weaknesses in Capital Adequacy calculations, including essential checks such as Loan To Income and Loan To Value Ratios which need ongoing re-evaluation as values within the property market decline.

An inability to efficiently consolidate customer records from multiple systems and recognize the value and risk profile of every client will also expose institutions to increased risk of customer defection, payment default and fraud.

To address these issues, Datanomic has outlined three core steps to mitigating risk through a Data Risk Audit, which takes into account the legal obligations of Basel II, Solvency II, anti-terrorism legislation, Single Customer View, migration of disparate systems and enhanced Capital Adequacy calculations. A Risk Audit comprises:

1. QuickStats Assessment - an analysis of the newly acquired data sources to identify potential weaknesses in the data collection and data management processes of the acquired institution, which can be conducted entirely on-site. The QuickStats can help identify missing, erroneous or mis-allocated data which can significantly impact on an organisation’s ability to make effective decisions in all areas. For example, the QuickStats assessment provides banks with the ability to identify the percentage of loans that are most at risk, and begin the process of liaising with these customers at risk at a much earlier stage.

 

2. Comprehensive Risk Audit - a full screening of the new customer list against enhanced global Sanctions and PEP lists, containing over half a million names of terrorists, convicted fraudsters, politically-exposed individuals and others who pose a risk to the organisation. Without screening the newly expanded client base against such comprehensive lists, financial institutions are operating blind and potentially exposing themselves to significant, multi-million-pound fines and reputational damage.

 

3. Customer Crossover Audit - identifying customers shared by the merging organisations is important to understand financial exposure to combined loans, and also identifying those customers who hold savings with each organisation which, when combined, are above threshold levels guaranteed by the Government and as a consequence might look to withdraw funds to spread risk.

   To discuss the Datanomic Data Risk Audit, or to arrange an initial appointment, complete the form below or call us on 01223 228450.

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