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Barings-type failures less likely with modern data governance: Solidatus

Derivatives trader Nick Leeson might have been unable to hide his unauthorised activities from Barings Bank if today’s data management technologies had been available, according to Solidatus business development director Gary Chitan.

In 1995, Leeson’s errors resulted in huge $1.3 billion losses — causing the 200-year-old bank to collapse. But, notes Chitan, it was much more difficult to track the activity of even a single thread of data back then.

“What would Barings have given to visualise how the data moved through their organisation? And with additional data quality scoring, tracking data anomalies up and down stream would have highlighted Leeson’s hidden account,” Chitan writes in a Solidatus web update.

“There was no grand plan, nor was Leeson a hyper-intelligent villain. If you remove just one of the positions from Leeson then Barings Bank, in some form, would probably still be here today.”

Chitan explains that Leeson had been promoted to more than one business role and had retained responsibility for setting his own trades. This meant he was able to hide his losses from his superiors in both Singapore and London through an entitlement error. He simply carried on making his poor bids — hoping to make good and recover the losses over time.

With the Solidatus solution, instead, an entitlement process can manage thousands of users and business roles. These can be imported from an HR system and associated with Active Directory (AD) Groups and AD Group capabilities. Business rales have been applied to confirm if individuals have appropriate access to systems and data based on their location, function or role.

“Adding rules to highlight access to multiple domains can also highlight toxic access rights combinations. When you can visualise the complexity of the entitlement process, it becomes obvious why the high risks of providing Leeson a toxic access rights combination at Barings were not appreciated,” writes Chitan.

In a Q&A announcing his appointment, Chitan explains that Solidatus piqued his interest because of its unique approach to complex data management problems. Many offerings in the market are primarily either technical or business focused — leaving a gap in the market to bridge the approaches.

“These are generalisations, but bridging the chasm between these two approaches is where the competitive edge and market opportunity lies,” he says.

“I saw very quickly that using Solidatus could help organisations leverage the investment they have already made by integrating with the solution to quickly deploy their data landscape. This speed of deployment facilitates both the monetisation and democratisation of data which all organisations aim to achieve.”

The company works through consulting, technology and distribution partners for its workflow-enabled enterprise data management solution.

Read the full Solidatus blog post on lessons from Barings Bank.

(Photo by Jude Beck on Unsplash)

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