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12 May 2021

Why good entity data matters now

Andrew Bockelman

Data management handbook

Few of us will forget that feeling of uncertainty that pervaded the early months of 2020. As we heard about a mysterious new virus spreading around the world, we were left with countless questions. What will happen to my company? What will happen to the economy? How long will this continue?

For those of us who manage data, the uncertainties of 2020 reminded us of our important role in bringing facts and truth to otherwise indeterminate situations. Now, as we emerge from the pandemic, we remain conscious that good data matters more than ever.

The post-pandemic world brings new risks and new opportunities. 2021 will be a crucial year when having useful and usable data will make the difference between finding new opportunities and falling foul to risk.

The pandemic has amplified trends that were already discernible before changes ensued. Many nations turned inwards amid the pandemic, but now a resumption of outward focus is rekindling geopolitical transformation.

Global trade patterns are shifting, as is consumer behaviour. As these patterns change, so too does creditworthiness across geographies, sectors and individual businesses.

Financial crime, from fraud to money laundering, remains a persistent concern, as financial institutions and regulators scramble to implement solutions during a time of increased digital commerce.

Regulators, meanwhile, are responding to these shifts with ever more harmonized legislation, from sanctions to anti-money-laundering initiatives and inter-governmental tax cooperation – all at an accelerated pace.

With change on so many fronts, decision-makers need to take an integrated approach to risk assessment. Knowing who you trade with – where you can do more; where you should do less – is key. This calls for impeccable entity data.

Integrated risk assessment is about concurrently evaluating all upside and downside factors – not just the usual financial considerations, but all considerations that can make an entity a desirable or undesirable trade partner.

Entity data lies at the core of this understanding, and companies around the world are seeing real value from investing in high-quality reference data.

Businesses of all size are studying their suppliers and even their suppliers’ suppliers, aiming to create resilience within supply chains. If they’re to spot the right partners for the long haul, they’ll need extensive entity data and tools to assess shareholder and inter-company links, creditworthiness, and exposure to cashflows potentially tainted by corruption or criminality.

Environmental, social, and governance (ESG) factors are also worth recognizing. Good ESG practice can propel growth and mitigate reputational risk. As ESG transparency grows, organizations will seek better visibility of their own profiles as well as others’ – whether that’s guilt by association with labor abuses in the upstream or downstream value chain, or capital that is tied up in carbon-heavy holdings. There’s simply no excuse for not knowing.

On the regulatory front, high-quality entity data is empowering both regulators and financial institutions to further automate KYC and AML processes. With better information around identities, ownership, and historical behaviour coupled with advances in artificial intelligence, financial institutions can spend more time pursuing legitimate opportunities and less time dealing with problem cases.

As business models stabilize after the pandemic, investment opportunities will become clear to those with the most immediate information at their fingertips. Analysts who have fast access to detailed company financials and real-time event-driven data will be a step ahead.

Transparency will also be fundamental to forging collaborative growth opportunities in our evolving global economy. Organizations will want to share information with supply chain partners, R&D affiliates, distribution networks, and government institutions. These collaborations will only be possible if based on a thorough understanding of one another.

The successful organizations of 2021 will be those that embrace an integrated approach of this kind, spanning every aspect of risk and opportunity, supported by the most reliable and quickly available entity data.

Find out more in A-Team Insight’s Entity Data Management Handbook 2021

Andrew Bockelman

Andrew Bockelman, General Manager, Data Solutions

Andrew Bockelman is General Manager, Data Solutions, Moody’s Analytics

Andrew Bockelman is General Manager, Data Solutions, Moody’s Analytics

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