Basel Committee on Banking Supervision’s article 239 (BCBS 239) is a set of principles with a clear general objective: ‘to strengthen banks’ risk-data aggregation capabilities and internal risk-reporting practices (the principles) to enhance risk management and decision-making processes at banks.’
The 14 principles cover four topics: the first three topics address the banks and the last one addresses supervisors. The initial scope is to address only global and domestic systemically important banks (SIB). Nevertheless, as per the standard, local supervisors may also apply the principles to other banks. The timeframe to implement the standard is aggressive: G-SIBs must comply by January 12016 and D-SIBs three years after their designation as domestic systemically important bank.
The introduction of new regulation and principles for risk-data aggregation impacts the majority of banks. The main difference between BCBS 239 and previous standards is its overarching objective and the fact that compliance is required by the supervisor. A self-assessment would show the strengths and weaknesses of a bank's current data aggregation capabilities and risk-reporting practices. By approaching the topic proactively , banks can identify the intersections between the standard and their own businesses and operating models, and develop an adaptable solution that meets the current regulation. A self-assessment by G-SIBs shows how hard it is to comply with the principles, 14 out of the 30 G-SIBs have reported that they will be unable to fully comply with the principles by the 2016 deadline.
Author: Rob Voster, senior manager