Data Governance and Auditing: Four Key Facts for Hedge Funds
Mar
26

Data Governance and Auditing: Four Key Facts for Hedge Funds

Data is the most important element of any organization, and as a result, companies of all types and sizes need to understand who uses it, and where and how their data is stored. With the growth of unstructured data, which refers to data that is not organized in a specific manner, companies have needed to develop governance and auditing methods to ensure that they can identify the locations and usage of their critical data pieces. Unstructured data also poses risks such as  potential data theft and cybercrime, so these policies ensure that data stays secure and protected. For hedge funds and other investment management companies, the risks are even greater when it comes to data loss and prevention, due to the large amount of assets and personal investor information that comes in the form of this unstructured data. As a result, it is essential that these firms understand the importance of data governance and auditing policies. Read on for four key data governance and auditing for hedge funds facts on data governance and auditing.

Data governance and auditing is defined as a group of measures that ensures essential data assets are formally managed throughout an organization. For hedge funds and investment firms, this data can include investor information, investment decisions and other critical financial information. With the threat of cybercrime and hacking targeted at the investment industry on the rise, it is necessary for firms to adapt in order to ensure that they know exactly how and where their critical data is housed, as well as who can access it.

Data needs to be protected and monitored against potential threats, and as a result the SEC has recently begun to place guidelines on data usage and control access issues. The guidelines were developed to minimize the risks posed by the growing amount of data as well as cyber criminals. Firms are now required to develop data governance and auditing policies in order to ensure that they can classify their sensitive data and know exactly where it is located on file servers.

Some firms may choose to outsource their data governance and auditing policy creation to their IT provider. Strong data governance and auditing services will report on permission structures so that firms know exactly where their sensitive data is housed. When evaluating a data governance and auditing service provider, firms should make sure that the agents deployed to their site will feed information to the back end on their provider’s data centers. This process will allow for reporting and alerting based on specific rules. These types of services enable users to access large amounts of data in short amounts of time, while providing safety and security, and are typically offered in subscription formats based on firm user count.

When it comes to implementing data governance and auditing programs, it is vital for firms to remember that while time consuming, these policies can bring many benefits. By identifying the correct outsource partner, firms can remove the burden of managing the data themselves, while still ensuring that the appropriate levels of reporting and protection for critical data are met. Additionally, data retention and auditing policies can provide firms with decision making confidence by ensuring that data is accurate.