BCBS published the latest progress report on implementation of the BCBS 239 principles, also known as the Principles for effective risk data aggregation and reporting, by banks. The report reviews progress of 34 global systemically important banks (G-SIBs) in implementing the principles as of the end of 2018, with the assessment having been completed before onset of the COVID-19 pandemic. The assessment concludes that none of the banks are fully compliant with the principles in terms of building up the necessary data architecture and, for many, IT infrastructure remains difficult. However, banks' efforts to implement the principles have resulted in tangible progress in several key areas, including governance, risk data aggregation capabilities, and reporting practices.
Despite the improved overall performance, no bank has been assessed as fully compliant with all the principles in this assessment. This contrasts with the 2017 assessment exercise, in which three banks had qualified for the rating of “4” (the highest rating) for all principles. Increased awareness among banks has resulted in better in-depth analysis and this, together with the expanded scope of projects aimed at implementing the principles, partially explains the ratings downgrades. Many banks have expanded their implementation scope beyond risk data management to incorporate strategic initiatives—including regulatory reporting, financial reporting, and recovery and resolution planning—into their BCBS 239 implementation programs. Supervisors observed notable improvements in banks’ overarching governance, risk data aggregation capabilities, and reporting practices. In particular, banks have:
- Established enterprise data strategies and data management frameworks and appointed relevant governance committees and managers for key roles in data management (such as data-owners and -stewards) to improve data oversight
- Improved data dictionaries, which is a key aspect of Principle 3, enterprise data quality metrics, and data lineage
- Enhanced quality assurance, allowing identification and correction of data quality issues
- Initiated automated reporting platforms, which strengthen ad hoc reporting capabilities
- Established group-level reporting policies, which set out the periodicity and dissemination of reports
As per the progress report, the reasons why banks have been unable to effectively implement the Principle 2 on data architecture and IT infrastructure have not changed drastically over the years. Banks have unaligned IT solutions and legacy systems, which hamper reconciliations of risk data. This hinders banks from producing accurate reports with sufficient granularity to meet ad hoc data requests. This also explains the challenges faced by banks in implementing Principles 3 (accuracy and integrity), 5 (timeliness), 6 (adaptability), and 7 (accuracy). Appendix 2 to the report provides more detailed examples of effective and ineffective practices among banks for implementing the Principles. BCBS will continue to monitor the progress of G-SIBs in adopting the principles. Nevertheless, to promote full adoption of the Principles, the Committee has made the following recommendations:
- Banks should continue to closely monitor their implementation of the principles, adapting them as necessary to take into account any changes in the financial sector. Banks that have struggled to implement the principles should address weaknesses promptly, which may include committing the resources needed to complete data architecture and IT infrastructure improvement projects.
- Supervisors should continue to monitor the progress made by banks in implementing the principles. Supervisors should also take appropriate measures to address delays and ineffective implementation
Keywords: International, Banking, Reporting, Data Aggregation, BCBS 239, Progress Report, G-SIBs, Statistical Reporting, BCBS
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