Risk Aggregation and Reporting: More Than Just a Data Issue

The BCBS (Basel Committee on Banking Supervision) “Principles on Data Aggregation and Risk Reporting” have been finalized with the current compliance date of 2016, which sets a demanding goal for globally significant important financial institutions. As banks mobilize to implement the principles, they may find themselves also balancing demands for other regulatory implementations, addressing changes in the current business landscape and improvements in the effectiveness of their expenditures. As banks explore how to properly implement these principles, consideration should be given to the application of a sound and robust risk appetite framework aligned to the business strategy. The BCBS principles are intended to help strengthen the bank’s risk data aggregation capabilities andinternal risk reporting practices. However, a closer examination of how these principles might be implemented points to a number of areas for possible improvement.