Systems and data | KPMG | BE

Systems and data

Systems and data

All banks will need to change their systems – or to build new systems – to ensure that they are able to collect, analyse and report the necessary data on borrowers and other counterparties in order to calculate the new risk weights under the revised approaches to credit and operational risk and to apply the output floor.

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Systems and data

All banks will need to change their systems – or to build new systems – to ensure that they are able to collect, analyse and report the necessary data on borrowers and other counterparties in order to calculate the new risk weights under the revised approaches to credit and operational risk and to apply the output floor. Where relevant, this includes the use of due diligence to check on the accuracy of external credit ratings; an assessment of whether borrowers are materially dependent on the cash flows generated by a property securing an exposure; and the calculation of internal loss experience.

For operational risks, banks not currently using the advanced measurement approach (AMA) will have to put the necessary systems and processes in place to collect, analyse and report the data required to calculate business indicators and internal loss experience; while even banks currently adopting AMA may have to revise their systems and processes to deliver the required calculations.

Banks will also need to ensure that they are reporting the correct data and calculations to their supervisors and in their Pillar 3 disclosures. The difficulties faced by many banks in meeting all of the Basel Committee Principles on Risk Data Aggregation and Reporting suggests that the systems and data requirements of the revised standards will require considerable investment and senior management attention.

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