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AEGON: TACKLING THE RISING TIDE OF REGULATION WITH ASSET CONTROL

Working with Asset Control’s AC Plus has enabled the Dutch insurance company’s Group Risk Market Database team (MKDB) to formalize its processes to load, validate and deliver accurate, timely data; realize higher quality data; gain a better understanding of the data used within the organization; establish agreements with downstream systems; and achieve compliance with its Data Quality policy.

The tide of regulation is rising inexorably; from Dodd-Frank to Basel III and Solvency II, the regulatory response to the enduring financial crisis continues to evolve but the direction of change is constant. In recognition of this, organizations are starting to rethink the way in which they approach financial data management and are shifting the focus away from accumulation of data and onto its delivery. For example, Aegon has proactively managed its progress towards embedding ‘Solvency II requirements into its existing business processes in a business-as-usual environment’.  In particular, Aegon’s Group Risk department, who has been working with Asset Control since 2009, has not only achieved sound data management processes and governance, but is also changing the way in which the organization views its data.

The Business

Aegon N.V. is an international life insurance, pensions and asset management company. Aegon is headquartered in the Netherlands, listed on stock exchanges in Amsterdam (NYSE Euronext) and New York (NYSE) and employs, through its subsidiaries, almost 27,500 people worldwide. Aegon operates in more than 25 countries in the Americas, Europe and Asia, and serves millions of customers. Its main markets are the United States, the Netherlands and the United Kingdom.

In 2009, Aegon initiated a market database project as part of its economic framework initiative, an internal standard for valuing assets and liabilities and measuring associated risks, to enhance the company’s ability to make optimal economic decisions.

As part of this project, Aegon selected Asset Control’s AC Plus as the data management platform to provide a single source of market and derived data for its Group Risk teams as well as other teams at Aegon and Transamerica.  MKDB, Group Risk’s Market Database, was set up to store historical and current end-of-day market data which is used for risk reporting, liability valuation, pricing, attribution analysis, and hedging.

The Downstream Value of Data Management Processes

MKDB’s data feeds into various downstream systems for further processing.  End users work with the data to value liabilities, estimate capital requirements, calculate pricing and more. Low data quality is a risk that must be carefully managed.  There can be significant adverse impacts if erroneous data is delivered to downstream systems.  Getting quality data from a single source mitigates that risk and ensures reporting consistency.

Working with Asset Control has helped Aegon to establish both formal and informal agreements about the data that MKDB delivers and how it delivers this data.  One of the most important formalized processes is MKDB’s data validation.  Aegon formalized its Data Quality Policy in 2011 which defines the following key principles for data quality: appropriate, complete and accurate. Using Aegon’s Data Quality Policy as a springboard, MKDB aligned its own policy to focus on complete and accurate data, with appropriateness being the remit of the end user and falling under the oversight of Aegon’s Risk Governance framework.

“Data quality doesn’t just happen,” says Susanna Bauder, MKDB Manager, Aegon Group Risk. “Gathering data is only the first step.  There are several other processes – automated as well as manual – that are applied to deliver the final product: good quality data.”

Aegon uses AC Plus to underpin an entire data workflow that includes monitoring for completeness and accuracy. Business process controls supplement the automated validation checks and internal data experts review and comment on findings. The performance of the entire process is also regularly reviewed with validation checks and parameters adjusted if necessary.

The Benefits

As a result of this work, Aegon has confidence that it is achieving an even higher quality of data and a better understanding of how data is used within the business. “With Asset Control we have developed a better understanding of our data and are more able to quickly recognize data issues. Quality is higher and we are becoming more agile in the way we work. It’s enabling us to get better data to end users faster – and in that sense is really supporting the wider corporate objective to improve financial data management,” concludes Susanna Bauder.

In other words: Aegon’s data management processes are not just enabling them to better tackle the rising tide of regulation but they are positioning them to ride the crest of the new wave of financial data management.