Imagine a group of firefighters, scattered on various floors of a skyscraper, working together to put out a series of blazes. Now imagine that each of the firefighters uses a different word for hose, for smoke, for fire, even for firefighter. The job - already challenging - suddenly becomes far more difficult.

That's akin to the challenge facing banks as they try to identify and contain their interconnected risk in the wake of the financial meltdown, says Michael Atkin, head of a group pushing for consistent language around the data vital to banking operations.

It's not a new problem. The lack of standard definitions for critical information - as simple as, say, the meaning of "closing price" - has long complicated transactions in the banking industry, says Atkin, managing director of the Enterprise Data Management Council. Near the end of any deal, he says, the parties devote a significant amount of time to reconciling their definitions, such as whether "closing price" means the last trade before the bell or should reflect after-market trading.

But today, as banks attempt to "unravel the mess we're in," the need for such standard, consistent language across the industry has become undeniable, says Atkin, whose four-year-old organization lists some of the world's largest financial institutions as members.

The industry is so interconnected that one bank's problems quickly spread to other institutions, Atkin says. With that level of dependence, he contends, banks need to be speaking the same language when it comes to describing data and operations.

"It's required for risk management and systemic oversight and all the rest," Atkin says. "Our current circumstance shines the light on its necessity."

EDM Council, based in Washington, D.C., is lobbying for global standards for semantics to emerge from within the G-20, the group of finance ministers and central bank governors from the world's most powerful economies.

Atkin has spent months stumping for the cause. To raise awareness, he talked to leaders inside the Securities and Exchange Commission, Federal Reserve and Treasury. He hawked the idea to the European Central Bank, the International Monetary Fund and other global organizations. He went before Congress, testifying to the House Financial Services Committee.

Now he and other council members are in round two, Atkin says. They are visiting with regulators again, this time offering them specific proposals on ways to create uniform definitions for the terms banks use to do business with one another every day. The council is recommending that regulators focus first on creating - and enforcing - common definitions for ordinary but critical terms such as "closing price" and "affiliated company." (Atkin's message: If every bank has a different definition for such workaday words, how can one institution be comfortable with another's information.) Second, the council recommends that regulators give a defining code to every company, subsidiary and offshoot doing business in the industry. The code, which would be required in all legal transactions, would work as a Social Security number of sorts, Atkin says, and allow regulators and the banks themselves to track who is doing business with whom. For example, it would let them easily spot who else might be affected by the troubles at an ailing financial institution, Atkin explained.

"Then policymakers can make wise decisions about how they want to manage risk," Atkin says.

Among regulators paying attention is John A. Bottega, chief data officer of the Federal Reserve Bank of New York's markets division.

Global industry standards are nothing new, Bottega says in an e-mail interview.

"Manufacturing, utilities, pharmaceuticals all have standards that enable the factory, the supplier and the consumer to communicate more effectively and efficiently."

Financial institutions say the biggest barrier to establishing industry-wide standards for defining their operations-especially in the current economy - is cost.

The price of modifying systems and processes to adhere to common standards will be painful in this environment, Atkin agreed, noting that the cost will vary from bank to bank.

"The difficulty is integration and conversion to a standard," he says. "It's expensive."

Bottega contends there will be a money-saving upside to the investment in creating common standards.

"If done properly, firms themselves will benefit from lower operational costs ... and the industry will benefit by shortening the time needed to aggregate information," says Bottega, the former chief data officer at Citigroup and a supporter of the EDM Council's efforts.

It's a step banks must take, says John Mulholland, global head of reference data for the Royal Bank of Canada and a member of the EDM Council board.

The biggest lesson from the financial meltdown, Mulholland says, is that when it comes to containing risk, each bank - no matter its diligence - is vulnerable to the practices of its financial industry peers. And the only way to understand that vulnerability, he says, is to have a common language for identifying it.

Containing risk, he says, "is never going to work without common standards across the globe."

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