Season 2 | Ep. 44: Building a Strong Foundation for Risk Reporting

Effective risk management reporting is essential for decision-making, regulatory compliance, and overall institutional success. Whether you're considering licensing a third-party risk Intelligence solution or building your own reporting framework, understanding key principles and data perspectives will guide you toward a robust, scalable system. Sam Utz, SRA Watchtower Product Analyst joined host Ed Vincent on this episode of the Risk Intel podcast to explore foundational aspects of reporting such as data governance, creating an infrastructure, configurability vs customization, and breaking down the differences between shallow and deep views of data that financial institutions should prioritize. Listen or watch the full episode below or read the summary of today's episode on building a strong foundation for risk reporting.

Four Key Principles When Licensing or Standing Up Your Own Reporting Solution

When financial institutions look to either license a robust SaaS based risk reporting solution or develop their own in house, there are several foundational principles, Sam Utz - a reporting and analytics expert wants our listeners to keep in mind to ensure long-term success.

1) Data Governance

‍Strong data governance is the backbone of any reporting solution. Ensuring consistent, accurate, and secure data is crucial. Institutions should define data ownership, establish clear processes for data quality management, and enforce security protocols to protect sensitive information.

Sam provided an example from the early 2000s, when the majority of people were using excel for reporting. Even if it’s an internal file, there’s no encryption to get to the document. In today’s technology advanced world, enforcing permissions ensures that the correct people are seeing the right data.

2) Infrastructure

‍A robust infrastructure is critical for scalability and performance. Whether hosted on-premise or in the cloud, the infrastructure must be able to handle data processing at various levels, ensure system uptime, and support future growth without requiring complete overhauls.

“Make sure that we can ingest data in from various places to then synthesize it into one report” - Sam Utz, Product Analyst

Sam also discussed how integrations wrap into the infrastructure piece. Making sure the data is accurate and timely is largely solved by how the infrastructure is set up. Sam suggested some kind of SaaS product or internal database may help ensure consistency.

3) Single Source of Truth

‍Having a single source of truth ensures that all data originates from one location, maintaining consistency across reports. This helps eliminate discrepancies that could arise from pulling data from multiple, unaligned sources.

4) Configurability vs Customization

‍When evaluating a solution, it's essential to balance configurability and customization. Configurability allows non-technical users to adjust settings or reports without in-depth coding knowledge, this is typical of external solutions like SaaS solutions.

“Configurability is the approach most folks in the market are taking as they look to be able to scale at an accelerated rate”

Customization offers more tailored solutions but often requires more resources and technical expertise. A truly customized reporting solution is usually quite a lot of work, starting from Ground Zero. Sam mentions institutions that typically use a “custom” solution have in house analysts that build specific concepts as needed by the institution. Striking the right balance between these two options depends on the institution’s specific needs and future adaptability.

Shallow vs Deep Views of Data

Understanding when and how to use shallow versus deep views of data can make reporting far more effective.

Shallow View

‍A shallow view focuses on high-level, aggregated data to quickly provide insights or identify trends. This typically looks like charts or dashboards. For instance, a monthly board report might show the total number of high-risk loans without delving into specific details about individual loans. This level of reporting is beneficial for an executive team or board risk committee who are looking to make quick decisions and surface-level trend identification based on reliable data.

Deep View

‍In contrast, a deep view provides granular details, allowing users to drilldown into the specifics of a dataset. For example, a report tracking loan performance might allow users to filter by loan type, region, risk score, and even borrower credit history, providing a more nuanced understanding. This is particularly useful for day-to-day operations and strategic planning that requires more thorough analysis.

What Attributes Should a Financial Institution Consider?

When building or evaluating a reporting solution, financial institutions need to weigh several key attributes to ensure the system meets both current and future needs:

• ‍Trends and Forecasting: How well does the solution identify emerging trends and help project future outcomes?
• ‍Outliers and Anomalies: Can it flag unusual data points that may require immediate attention or investigation?
• ‍Data Accuracy: Does the solution maintain a high level of data integrity, reducing the risk of errors?
• ‍Adaptability for Future Reporting Needs: As regulations and organizational needs change, can the solution evolve without requiring extensive reconfiguration?
• ‍User-Friendly Interface: Is the reporting tool intuitive enough for various stakeholders to navigate and use effectively?
• ‍Visualization Capabilities: Does it present data in clear, easy-to-understand visuals that support decision-making?

Selecting or developing a reporting solution is a strategic decision that can have a significant impact on your financial institution’s ability to manage risk and adapt to future challenges. By focusing on strong data governance, scalable infrastructure, and the right balance of configurability, along with a keen understanding of data views and essential attributes, institutions can position themselves for long-term success.

As your reporting needs evolve, a thoughtful approach to these elements will ensure that your reporting framework remains effective and future-proof. If you'd like to learn more about Watchtower's data analytics and reporting capabilities, set up a meeting with Sam and the team by click here.