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While hackers and data-security threats have caused organizations across all sectors to tremble with fear and anxiety, the financial sector in particular is feeling quite antsy about the integrity of its data.
According to a recent survey by Deloitte, 40 percent of financial institutions are concerned about their ability to manage risk data. Even more to the point, less than 25 percent of the institutions surveyed “rate their technology systems as extremely or very effective.”
So what, if anything, is preventing banks, credit unions and hedge funds from investing in better, stronger and more robust technology that will help mitigate operational and technological risks?
One factor is the good ol’ divide between IT and the business sides of the house. CIOs find themselves having to prove the value of risk management software and analytics before they can get the business side to sign off, reports American Banker.
"Unless you can motivate the business and make it their priority, give them context from a business perspective, the CIO can't do anything," says Joe Bernik, a senior bank risk executive interviewed for the American Banker story.
The risk of not having modern and robust technology to track the accuracy and timeliness of the data has actually already played a detrimental role in the financial world — namely, the mortgage and housing crisis from 2008.
"A big trend is the recognition that the underlying data organizations use in risk management systems needs to be improved," says Edward Hida, global leader of Deloitte's risk and capital management services practice. "This came out during and after the credit crisis - the underlying data is not strong or timely enough."
While the situation may look bleak, financial institutions are increasing their investments in risk management software and tools. According to the Deloitte survey, 65 percent of the financial companies surveyed plan to increase their spending on risk management and compliance.