Progress in adopting the principles for effective risk data aggregation and risk reporting
The Basel Committee on Banking Supervision today issued the report on Progress in adopting the principles for effective risk data aggregation and risk reporting.
The Committee's Principles for effective risk data aggregation and risk reporting, which were published in January 2013, aim to strengthen risk data aggregation and risk reporting practices at banks 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.
To facilitate consistent and effective implementation of the Principles among G-SIBs, the Basel Committee decided to use a coordinated approach for national supervisors to monitor and assess banks' progress. The first step of this coordinated approach was to issue a "stocktaking" self-assessment survey completed by G-SIBs, other large banks and supervisors during 2013.
The progress report provides a snapshot of G-SIBs' overall preparedness to comply with the Principles, as well as the related challenges they face. G-SIBs are increasingly aware of the importance of this topic and have taken steps towards fully implementing the Principles. Nevertheless, many banks are facing difficulties in establishing strong data aggregation governance, architecture and processes, which collectively represent the initial stage of implementation. Instead, they resort to extensive manual workarounds. Notably, of the 30 banks that were identified as G-SIBs during 2011 and 2012, 10 reported that they will not be able to fully comply with the Principles by the 2016 deadline. The main reason reported is large, ongoing, multi-year IT and data-related projects.
G-SIBs are required to implement the Principles in full by the beginning of 2016 at the latest, and the Committee will continue to monitor their progress towards meeting this deadline. In addition, the Committee strongly suggests that national supervisors apply these principles to institutions identified as domestic systemically important banks three years after their designation as such. The Committee believes that the principles can be applied to a wider range of banks, in a way that is proportionate to their size, nature and complexity.