The ABC’s of Governance (It’s Not Just for Data)

Data Governance is a popular topic in our industry these days, and for good reason. The management of your firm's investment and market data requires a comprehensive support structure in order to keep it accurate and available across the enterprise. When we think about governance, data tends to be top of mind. However, as investment structures grow in complexity, governance becomes a critical issue throughout the business. If you are wondering which forms of governance should be top of mind, we offer a simple breakdown:

Asset Allocation: Asset allocation and risk management should be among the first areas that investment management firms outline clear governance policies for. These policies ensure investment managers build models that are structured with appropriate strategies to adhere to various investment policies. This type of governance gives investment managers parameters to guide their selection of assets while still enabling them to manage their portfolios freely.

Benchmark Management: Benchmark Management is a growing form of corporate governance as passive investment strategies become more popular. Governance policies for benchmark management monitor the changes in subscribed benchmarks, and helps build appropriate benchmarks according to investment guidelines. The benchmarks weights are managed within this group, decided upon by investment guidelines, and used throughout the firm to support the investment process.

Compliance: Governance policies for compliance are key to ensure managers adhere to regulatory, government, client, corporate, and portfolio guidelines. Compliance professionals not only monitor the firm's portfolio assets, but at times monitor broker and trading compliance as well.

These basic ABC’s of investment governance are a few of many that exist in investment management. While each firm has its own mix of governance policies, it is paramount that guidelines are well communicated and coordinated internally to ensure proper management of risk and execution. Many of Citisoft's client partners have created investment councils that maintain oversight in order to manage the governance decisions and communication throughout the firm.

Data governance should be part of any management strategy that is applied across the enterprise in order to operate successfully. However, investment managers shouldn’t lose sight of these ABC’s and the importance of a holistic and coordinated governance strategy.

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Patrick Kirchner

Patrick has over 20 years of experience working with some of the world’s largest investment managers. He has led and participated in a full complement of consulting services from strategic assessment and roadmap exercises, technology and data strategy development and assessment, to evaluation/selection of industry leading software, and complex, multi-site implementations. Patrick has a well-balanced background that spans across front, middle, and back office working in both technical and business-facing capacities and crosses multiple product classes.