When Worlds Collide: Immersive Data Risk Culture Building

First published on my website (When Worlds Collide: Immersive Data Risk Culture Building — AHUJA CONSULTING LIMITED)

In today's landscape, a convergence of data trends demands a fundamental reshaping of traditional Data Governance models—and Chief Risk Officers must take notice.

The advent of GDPR and similar privacy legislation across jurisdictions has elevated data privacy risk to a key priority. Fail to protect your customers' privacy and the consequences prove severe: heavy fines, reputational damage, and market position erosion inevitably follow.

Yet privacy risk represents merely one facet of the data risks confronting Financial Services and insurance firms. To remain competitive, being "data-driven" must transcend buzzword status and become operational reality.

In the relentless pursuit of profitability, organisational efficiency has become non-negotiable. This demands reliable data powered automated processes. More critically, it requires accurate, current management information that can be rapidly deployed—without the ubiquitous data wrangling that plagues most firms—to deliver genuine insights that uncover new opportunities and upselling potential.

Then there’s AI, the latest golden goose.?? Whilst extremely powerful and capable of transforming organisations, its uses are muted if the data that it's trained on is not fit for purpose.? The old adage of Garbage In, Garbage Out still holds true.?

Clearly, now, more than ever, data is a business-critical asset.? This is a trend that is only going to accelerate in a crowded marketplace where newcomers and challenger firms are aiming to upset the status quo.? Enormous value can be gleaned from data, yes, but the flip side of that is the risks firms run if that data is not up to scratch.

Beyond efficiency drivers, regulations like BCBS239 and Solvency II have transformed requirements.

Simplistic Data Quality Indicators no longer satisfy regulatory obligations. Regulators demand organisational introspection, requiring firms to evaluate control environments for fitness-for-purpose and robustness. This necessitates comprehensive Data Control Frameworks designed with methodical assessment of inherent risks within critical data flows.

Fail to build such a Framework and your firm risks being the latest in a litany of data disasters that have hit the press.?

Here's the challenge…

Data Governance teams typically lack capability to make these the risk assessments over the core data. The vocabulary of inherent and residual risk remains largely foreign to them, and they aren't positioned to establish risk appetite—all responsibilities within Risk Management's domain.

Conversely, Risk Management teams rarely comprehend data's intricacies. Properly assessing risks within critical data flows requires documentation at an appropriate level of granularity, often necessitating knowledge from diverse organisational sectors.

But the problem does not stop there.?

Given the divergent evolutionary paths of Data Governance and Risk Management departments, a cultural chasm has emerged that demands bridging.

In this second instalment on creating joint culture between these teams, I outline a rapidly implementable strategy that can incrementally extend across the organisation. For the first part, see: Bridging Data Governance and Risk Management Through Culture Change: An Imperative for Financial Services and Insurance Organisations | LinkedIn

Otherwise, read on.

Bridging the cultural gap

Culture permeates every organisational aspect and represents a vast domain. Effectively bridging this gap requires a cohesive, multi-layered approach, implemented across numerous organisational levels with close monitoring. While quick fixes prove elusive, meaningful results can still materialise rapidly.

Here's how immersive experiences can catalyse this shift:

Immersive Experiences

Many organisations establish Champions to bridge cultural gaps. However, these Champion roles frequently constitute mere "back-pack" responsibilities—insufficient to drive meaningful change.

To catalyse authentic cultural transformation, cross-pollination between key Data Governance and Risk Management personnel becomes essential. Cultural evolution only occurs when representatives from both teams immerse themselves in each other's domains.

Formal training provides foundations but proves insufficient alone. For genuine cultural transformation, people must experience the unfamiliar culture firsthand.

Consider language acquisition: would you better learn French through classroom instruction or by living in France? Only through the latter do you truly grasp French's intricacies and nuances.

The same principle applies here. For Data personnel to comprehend Risk's language and subtleties, they must embed within Risk teams. Similarly, Risk team members need immersion in Data environments to truly understand that discipline.

Research supports this approach. The 70:20:10 learning model demonstrates we learn most effectively through practical application, with formal study contributing merely 10% to knowledge acquisition.

Secondments of your finest talent for minimum six-month periods will incubate this vital cultural shift. Immersion delivers benefits for respective teams and the broader organisation as a whole.

But the impact extends further still.?

Armed with their experiences, these people become genuinely effective Risk and Data Champions within their respective domains.?? The “go-to” people in their teams; reservoirs of knowledge, breaking down operational and functional barriers.??

You can build this out further and develop Communities of Practice spanning the disciplines and potentially extending them to the business as a whole.? By cultivating cross-functional expertise, you create valuable knowledge hubs that can be leveraged across the firm.

Action Point: Establish these critical secondments as promotion prerequisites. Your people will emerge stronger and your organisation reaps substantial benefits.

That addresses operational levels, but this model applies higher in the management hierarchy as well.

Mandate your CDO or Head of Data Governance's participation on the Risk Committee, while your CRO or Head of Risk joins the Data Governance Committee. Their diverse perspectives yield richer insights within these strategic bodies, forcing greater alignment on data quality risk at senior leadership levels and embedding data risk vocabulary firmly within executive dialogue.

Dismantling silos across multiple levels fosters collaborative culture. Cross-disciplinary immersion should constitute an immediate priority.

The pay-off?

Driving closer integration between Data Governance and Risk Management ultimately delivers enhanced control over crucial assets, reduced regulatory and reputational risk, and meaningful competitive advantage.

In today's data-driven environment, organisations already establishing dedicated Data Risk teams will secure significant advantages moving forward. Those failing to take these steps risk falling behind, losing competitive advantage and damage to the organisation.?

?

Coming Next:? Building a Unified Data Risk Framework

?

Subscribe here to get future articles in this series.

--

Need Data Governance help?

?

Book a call here to discover how we can support you.