Details

  • Service: Advisory, Risk Consulting, Financial Risk Management
  • Industry: Banking & Capital Markets
  • Date: 1/23/2014

Regulatory Practice Letter #14-01 | January 21, 2014 

BCBS Issues Bank Progress Report on Effective Risk Data Aggregation and Risk Reporting
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Executive Summary

 

The Basel Committee on Banking Supervision (BCBS or “the Committee”) issued a report on December 18, 2013 entitled Progress in adopting the principles for effective risk data aggregation and risk reporting. The publication serves as a follow-up to its January 2013 publication entitled Principles for effective risk data aggregation and risk reporting (“the Principles”). According to the BCBS, the fourteen Principles1 outlined in the publication aim to strengthen risk data aggregation and risk reporting practices at banks in order to improve their risk management practices, decision-making processes, and resolvability. Firms designated as global systemically important banks (G-SIBs) are required to implement the Principles in full by the beginning of 2016.2

 

In an effort to facilitate consistent and effective implementation of the Principles among G-SIBs, the Committee decided to use a coordinated approach for national supervisors to monitor and assess the banks' progress. The first step of this approach includes issuing a "stocktaking" self-assessment survey completed by G-SIBs, other large banks, and bank supervisors during 2013. The resulting progress report provides an analysis of the G-SIBs' overall preparedness to comply with the Principles and the related implementation challenges they face, as well as some insights into the areas supervisors may potentially focus on in the coming years.

 

The progress report found that many banks are facing difficulties in establishing strong data aggregation governance, architecture, and processes, which represent the initial stage of implementation. To compensate, banks reported they are resorting to extensive manual workarounds. The progress report also noted that, of the thirty banks that were identified as G-SIBs during 2011 and 2012, ten reported that they will be unable to fully comply with the Principles by the 2016 deadline, citing large, ongoing, multi-year information technology and data-related projects as the main reason for their noncompliance.