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Success with Solvency II: Challenges and Opportunities for Asset Managers

The Solvency II directive provides for an EU-wide, consistent, risk-based approach to determining capital requirements for insurance firms. When fully adopted, the framework established through Solvency II will protect the insurance policy holder from risk of insurance company failure.

Adopting a strategic approach

Sound data governance and an enterprise approach to data management are key enablers of Solvency II. The GoldenSource 360 EDM platform assists insurance and asset management firms with meeting the requirements of Solvency II by delivering a suite of data management and warehousing components that are designed for use within a risk department.

Firms that take a strategic approach to meeting Solvency II requirements, rather than focus on the minimum necessary to satisfy the regulation, are at a significant competitive advantage. Such forward thinking firms are better able to detect and mitigate risk, reduce capital reserve requirements, satisfy regulators and satisfy their policyholders.

GoldenSource empowers buy side firms to adopt a strategic response to Solvency II. Using our 360 EDM platform, we enable firms to instil the key data management best practices that are fundamental to Solvency II compliance: a centralized repository, golden copy creation, and data governance.

A centralized repository

To support reporting requirements, a data warehouse must be in place to capture daily information including transactions and holdings, security and static data, valuations, and risk analysis results. This facilitates not only the provision of data into MCR or SCR calculation models, but also timely reporting.

Golden copy creation

Risk analysis, valuation, and reporting is only as good as the information it is based on - which includes information about securities, classifications, prices, market data, counterparties, collateral, ratings and positions. Enterprise risk management must cut across all lines of business. Proactive firms are implementing data management frameworks, at the enterprise level, to reach into each silo, consolidate all necessary information, and manage the process of validating, cleansing, and normalizing disparate data into a golden copy. This clean data is then submitted to the risk models. The virtue of an enterprise data management framework is that full traceability is possible - an added benefit when it comes to satisfying regulatory inquiries.

Data governance

Firms must implement strong data management processes. Use of an enterprise data management system provides a means to document, centrally, what assumptions are used in the sourcing and delivery of data. Data exception processes can be controlled and closely monitored. Strict access controls can be placed on how data is viewed, and when data must be manually modified (to address or override incorrect or incomplete data), such intervention can be entitled by user role and tracked in an audit trail. Presence of such a centrally documented and enforced data governance procedure will improve the outcomes of an Own Risk and Solvency Assessment, as well as its acceptance by the regulatory supervisors.

To find out more about how GoldenSource can help your organisation adopt a strategic approach to regulation, contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.