Weakness in data quality preventing risk assessments in key markets

OFR financial stability report highlights gaps in data as hindrance to risk assessments.

A lack of quality, scope and accessibility of data is preventing a full assessment of risks in key markets, according to the Office of Financial Research (OFR).

In its latest financial stability report, OFR explained deficiencies in data mean gaps in the data required by risk managers will continue to arise.

The report added that whether data management systems are keeping up with financial and technological innovation and the growing volume and variety of data is unclear.

“This work is ongoing. Deficiencies in data and data management remain a critical vulnerability,” it said.

OFR explained a broader adoption of data standards is needed to allow regulators, market participants and others to communicate more precisely about data.

“The measure of success for data standards comes not just from their development, though. To be a success, standards must be adopted or used in the financial system where they prove their value,” the report said.

It added that sharing of data between regulators must also improve, as a lack of timely data sharing limits regulators’’ ability to understand risks building up in the market.