Key Business Elements (KBEs): Why KBEs are the Secret to Better Data Governance

Getting to a common understanding of even basic business terms like “customer” or “product” within an enterprise is often easier said than done.  This is particularly true when discussing data or data elements.  For most organizations, a business glossary is intended to bridge the understanding gap.  While a typical glossary provides a definition along with other useful information (e.g. business term, etymology, use, and known aliases), this only scratches the surface.  However, a business glossary that also speaks to the human elements – and touches on the various nuances, potential pitfalls, and proper use cases – is more likely to result in a better understanding of the data.  With the introduction of Key Business Elements (KBEs), the importance of “full understanding” is even greater. What’s more, business glossaries only touch the surface of governing key data in the organization. Data lineage and quality are also key assessments that must be made on KBE’s.

Why KBEs are the Secret to Better Data Governance

Though the compliance deadline of January 2016 came and went, the Basel Committee on Banking Supervision Regulation 239 (BCBS 239) effectively raised the bar in the regulatory environment for risk data aggregation and reporting. As a result, KBEs as defined as part of the BCBS 239 regulation around Risk Data Aggregation (RDA) documentation requirements are here to stay.  As systematically important banks continue to engage in ongoing risk data transformations, the strength of their governance strategies around KBEs will be revealed.  Data aggregation and reporting will be easier – in terms of effort and time – where there’s strong data governance.  Alternatively, organizations may ultimately need to allocate additional time and resources to update and manage the critical regulatory and external-facing reports that get published

Key questions for adopting KBE governance strategies:

  1. What explicit requirements exist for executive leadership to manage business risks?
  2. What intellectual capital value is at risk and how can risk be limited?
  3. What steps need to be taken to align technology projects with strategic goals?
  4. How have compliance requirements of information increased?
  5. How are KBEs being leveraged within my organization?
    • Not all KBEs are created equal; many versions of adjustments for a given element can exist based on purpose of report and where it exists in the organization
  6. How can increased congruence be achieved and/or a lack of congruence be accounted for?
    • Different definitions, value and risk profiles exist depending on business (e.g., Total Risk Exposure (TRE) differs in consumer vs. commercial) and aggregation level

Kay Questions for Adopting KBE Governance Strategies

There are many challenges to good data governance

  • To name one, virtually every enterprise has seen or experienced situations where multiple taxonomies can create confusion.
  • For example, legal, compliance and finance may define the same point differently. As a result, translation is often incomplete, overlooked, or simply ignored.
  • Also, knowing what’s in and what’s out will always be a challenge – as not every data point used in decision-making will be definable at an enterprise level. And, over time, things change. Even if everyone is on the same page today, the meanings may change.

Given the reality that data points and KBEs have shelf lives, mapping everything is neither realistic nor a good strategy.  Knowing that maintaining the business glossary will be an ongoing and continuous effort makes the task more approachable and meaningful – given the commitment for accuracy and comprehensiveness is also understood.

As business users are growing more savvy, they are becoming more self-sufficient.  This can be good or bad, depending on their understanding of the data.  The level of understanding can vary significantly depending on an individual’s role and experience.  Making a few simple improvements to the data glossary and data dictionary one way to help improve the understanding of the data – and create efficiencies for the organization.  By flagging the KBEs in your data dictionary, your business glossary’s content is more complete.  Ultimately, this will save your business users time and improve data usage practices throughout the organization.

While data governance is the foundation for ensuring quality data throughout the organization, a more demanding (and perhaps more daring) workforce is calling for data governance strategies that evolve and stay ahead of those pushing the limits of the data. Those strategies should consider the depth of governance and any build versus buy decisions that may be applicable. Additionally, whether a solution is bought or created in-house, it should attempt to accelerate the process of governance – spending most of the time focusing on decision-making activities such as talking with the business, executives, process owners, etc. and the remainder executing the decision.

For more information about KBE Governance Strategies and How MCG Can Help, Contact Craig Sobol at