Global Risk
April 25, 2022
How Good Data Governance can Add Value and Reduce Costs
Loading component...
Relevant Articles
May 9, 2022 | Global Risk
April 25, 2022 | Global Risk
Global Risk
April 25, 2022
The exponential growth of data — the most important strategic asset of an organization — presents significant opportunities across all sectors. Organizations now hold substantial volumes of data and need better processes to help them understand their internal and external environments, stakeholders, responsibilities and opportunities to make better informed, strategic decisions and mitigate regulatory risks.
While many sectors have specific laws regulating certain types of data they process, the recent regulatory focus on data security, privacy and consumer protection brings heightened awareness to the fact that data governance programs should no longer be implemented for segregated portions of records that organizations collect and process. Establishing an overarching data governance program will help give organizations a competitive advantage and maximize the potential benefits that their data can provide.
According to the Data Governance Institute (DGI), data governance is “a system of decision rights and accountabilities for information-related processes, executed according to agreed-upon models which describe who can take what actions with what information, and when, under what circumstances, using what methods.”1 Essentially, the data governance program is the collection of policies, processes, roles, standards and metrics that ensure the efficient and effective use of data, allowing an organization to reach its goals.
The benefits of good data governance go beyond compliance. There is a tangible business benefit for organizations who build a holistic understanding of the data they hold, can govern this data through its entire life cycle and can build processes to leverage it for a variety of business needs while simultaneously addressing compliance responsibilities.
Many recent and updated regulations place the ultimate responsibility for data governance patently on the board of directors. Therefore, data governance should be on the board’s agenda to ensure it gets sufficient investment for compliance efforts and to materialize its full benefit and ultimately succeed in the long term by becoming integrated into the corporate culture. Legal, compliance, IT, internal audit and operations teams can also help build a strong business case for board-level attention and investment, focusing on the appropriate use of data for strategic value.
Issues such as fraud, corruption and data breaches can have significant financial and reputational impact on an organization. Quantifying the cost of these instances can help justify the investment in firmwide data governance program and technology solutions to prevent and detect problems before they escalate. Additionally, as different functions within the business start to socialize the benefits with executive leadership, many functions, including the CTO and internal audit, will see the value the data governance program brings to their departments.
Many recent privacy regulations have helped organizations prioritize their approach to establishing effective data management processes and implementing appropriate technology resources which are essential for the success of the data governance program. For example, processing protected personal data has significant GDPR implications, so many companies have already identified where that data resides and set up data governance processes around it. Conducting a risk/benefit analysis that prioritizes critical data, identifies which systems need to be modernized and establishes technical controls around them have helped organizations target the low-hanging fruit first.
With so much data accumulating over time, it is unrealistic to expect organizations to find a quick fix to map and index all of their information at once. Many organizations with complex and mature operations that are spread across multiple jurisdictions are struggling to implement robust, organization-wide data governance programs, especially where they are growing at a fast pace. To harness the full potential of data, organizations must implement and continually refine their strategies for data life cycle management. Compliance and legal teams should not be daunted by this seemingly weighty task. Initial modest efforts to design data governance processes and inventory their data can significantly enhance strategic decision-making, add value, and mitigate the risk of costly regulatory investigations, fines and consumer protection claims.
However, most organizations are at a point where they are ready to move beyond initial regulatory mandates and take a holistic approach to their data governance strategies, leveraging tools and artificial intelligence to conduct data analytics.
Data analytics is now widely used by organizations to increase efficiency, reduce costs, enhance decision-making and monitor the outcomes of those decisions. The first step in developing effective and accurate analytics is proper data governance. Knowing where data resides within the organization, why it was created, who owns it, how it is maintained and how to properly access it is fundamental to developing analytics and insights which can then be used to improve performance.
The same is true when using software and technology effectively. When implementing any piece of technology which will be using data or creating it, organizations need to think critically about the proper data inputs and where to source them as well as how to manage outputs and disseminate related information to ensure they realize the return on their technology investment. This decision-making process is significantly easier, and chances of success are significantly higher when proper data governance and surrounding processes are in place.
Good data governance significantly and positively impacts legal, compliance, IT and internal audit teams when proactively monitoring behaviors and reactively investigating past actions. If relevant and critical information has been mapped, stored and maintained appropriately, processes can be built to identify and analyze that data quickly and efficiently to provide the facts and evidence required for strategic decision-making. A practical approach requires a combination of governance, hygiene and technology. Then, gradually — in addition to reaping the benefits described above — the downstream time and costs involved in investigation and litigation will start to reduce.
Harnessing the power of data doesn’t have to be a daunting task. Identifying critical data elements, understanding and enhancing the end-to-end data governance life cycle to meet the organization’s needs and applying the appropriate technology to help monitor these efforts will lay the foundations for a robust, effective program which adds value across all business functions.
For more information, contact our Data Insights and Forensics team.
Source
1 https://datagovernance.com/
Kroll Is Headquartered in New York with Offices Around the World
One World Trade Center 285 Fulton Street, 31st Floor
New York, NY 10007
+1 212 593 1000
Get Your Weekly Heads Up