BCBS Gauges Progress on Implementation of Data Aggregation Principles
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
Related Links
Keywords: International, Banking, Reporting, Data Aggregation, BCBS 239, Progress Report, G-SIBs, Statistical Reporting, BCBS
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
