As you’ll surely know the overall objective of the BCBS239 regulation is to strengthen banks risk data aggregation capabilities and risk reporting practices, as it relates to credit risk, operational risk, market risk and liquidity risk. Now this regulation is mandatory for the ‘systemically important banks’ – known as G-SIBs – such as BNP Paribas, ING and Belfius (in Belgium). A full listing of these banks is available here. It is however also strongly recommended that national regulators enforce the same regulation principles to banks known as D-SIBs, 3 years after their identification as such.
The new regulations insist that G-SIBs should be able to produce their aggregated risk numbers ‘within a short time, like in a crisis mode’. The overall aim is that a better understanding of their risks will help improve decision-making processes at banks. Remember 2008? Well the financial authorities still remember it well too … BCBS239 is a step to ensure that history doesn’t repeat itself.
|What is the BCBS239 regulation?|
A regulation in reaction to the 2008 crisis, the BCBS239 regulation outlines 14 principles under 4 main chapter headings including I. Overarching governance and IT infrastructure; II. Risk data aggregation capabilities; III. Risk reporting practices and IV. Supervisory review, tools and cooperation. Even though it is a principle based-regulation with few clear and defined metrics that can be used to monitor compliance, it is designed to improve the reporting and supervision of risk within large banks.
Do you have time to wait for someone to give you one single version of the truth?
In the long term, the solution seems simple: streamlined data aggregation as an input for all BCBS239 requirements. However this is easier said than done as many banks have legacy IT systems that are not adapted to the improved financial regulation reporting demands. Moreover the data necessary to feed the reporting needs is not available from one single data source but is historically spread throughout the organisation.
Making faster and more accurate reporting a reality is one reason large banks have appointed a Chief Data Officer. This CDO will need to make sure that the risk numbers are regularly available and that they are accurate and verified. Legacy IT systems, with data spread over a multitude of sources, and additional pressure on operational and commercial use of data is just adding to the difficulties facing the CDO.
We need those numbers… now
Let’s imagine that you have all the data available, and it has been aggregated and verified. In itself that already seems like a great achievement. But now imagine you need to be able to produce the necessary dashboards and insights on the spot? The dream seems a bit further away now, doesn’t it? The reality is that many G-SIBs cannot currently deliver accurate numbers within a limited time frame, and it would be even harder if they were in a difficult ‘crisis’ period. This inevitably will take time to develop and even longer to set up and be put in place. Can the G-SIBs wait for concrete results in IT to deliver the aggregating risk on operations?
If you think the answer is yes … then that’s fine you don’t need to read any further. But if you think the answer is no … then dFakto has a cost-effective solution for you that could be worked out and delivered within just a short time frame.
dFakto are experts in managing data and aggregating results. They have a long track record of sourcing and storing confidential data from within IT systems, verifying it, enhancing it as necessary and then presenting it in a way that is easy to understand by everyone. Their data factory and data vaulting techniques allow for real-time dashboards meaning that if you have a risk aggregation question tomorrow you can also answer tomorrow.
If you are looking for a real answer to this problem, and in a short time frame then don’t just put more consultants on the job, hire people who can deliver an effective solution that includes business intelligence and technical know-how.