Government Sponsored Entity Data Integrity Compliance
To fulfill its mission as a Government Sponsored Entity (GSE), our client conducts business in the U.S. secondary mortgage market and works with a national network of mortgage lending customers.
Challenge
Our client had been assessed several data integrity findings by both the second and third line functions. Each finding was being addressed piecemeal and did not address the need for an overall data integrity framework. Our client wanted to aggregate all of the findings and create a plan to set up new processes, procedures and systems to mitigate the deficiencies over modeling input, estimation and production data.
The client recognized that it would need to work with other business units and third parties to define the ownership of each data element in order to identify upstream and downstream controls. The GSE had a data function but only in one business unit and the data elements utilized in modeling spanned across multiple business units.
The remediation of this deficiency would require the assessment of all controls over data, the identification of critical data elements for each model and the development of requirements for data diagnostic reporting.
Our client was challenged to define the necessary steps and timeline to remediate these deficiencies. They did not have the necessary data integrity expertise or resources to effectively identify the critical data elements, establish a data warehouse and identify the controls necessary to remediate their data issues.
Solution & Delivery
Our client recognized that their current risk governance procedures and processes to identify modeling critical data elements and implement diagnostic reporting were not meeting data management and usage requirements from FHFA. Therefore, they asked us to assess their data integrity framework and identify if a major finding over data integrity should be raised to begin the effort to holistically address data integrity across their functional area.
In order to ensure remediation of this deficiency, we conducted the following activities:
Assessed data integrity issues against the operational risk matrix and provided information to raise a major finding for data integrity
Performed gap assessment between existing procedures and FHFA requirements to update modeling procedures and recommend updates to the model standards
Updated modeling procedures to meet FHFA requirements for data integrity and remediate the deficiency
Conducted an assessment of ten high risk models to identify data controls and critical data elements
Created an inventory of 165 unique data elements and their controls. Recommended additional controls to ensure data integrity over critical data elements
Defined data diagnostic reporting requirements to meet the six dimensions of data integrity: quality, consistency, accuracy, validity, timeliness, and uniqueness
Reviewed data integrity findings across all business units and recommended a long term vision to achieve a coordinated and efficient data governance approach
The implementation of these processes and identification of requirements to set up a robust framework to ensure data integrity, required the development and execution of a coordinated project plan and data integrity expertise to quickly and effectively develop processes which would support data identification and diagnostic reporting to ensure modeling data is fit for purpose. During this effort to address this business unit’s compliance to regulatory requirements, we identified that other business units within the GSE were given data integrity findings from 2 nd and 3 rd lines and were working disparate efforts to address the same issues. We collected all of the initiatives and recommended an overall approach for the GSE to implement a long term strategy to achieve a data integrity framework across all business units.
Project Length: 8 months
Impact & Lasting Value
Clarendon Partners delivered on time and on budget the processes and procedures required to remediate the major finding. The engagement team worked with the client’s organization and across multiple business units to develop a critical data element inventory, update the procedures and design a long term strategy to implement a data integrity framework across the organization. Strong data management enables the GSE to reduce its exposure to operational, financial, and reputational risks. Consistent data management methods will reduce the likelihood of operational errors, adverse business decisions, and financial loss.