The European Central Bank (ECB) has published a report (PDF 136 KB )on its thematic review on effective risk data aggregation and risk reporting. The ECB states that the implementation status of the Basel Committee principles on risk data aggregation and reporting (BCBS 239) remains unsatisfactory, and that the overall level of progress is a source of concern.
Implications for banks…
The ECB expects banks to present roadmaps witch clear remediation plans to address and mitigate each of the findings in line with both supervisory expectations and the recommendations provided by the joint supervisory teams. There will be a continuing process of monitoring and follow-up on the gaps identified.
In 2016, the ECB launched a thematic review (of a sample of 25 major European banks) to assess the implementation status of the BCBS 239 principles. In doing so, the ECB followed a four-step approach:
This assessment was complemented by two additional analyses:
For each BCBS 239 principle, the ECB describes the main findings as well as the key recommendations. Below are the main ECB observations regarding the two first BCBS 239 principles:
Regarding Principle 1 (Governance), a lack of strategic attention at senior management level was identified by the ECB, resulting in insufficient support for risk data projects:
Regarding Principle 2 (Data architecture and IT infrastructure), the ECB highlighted that a silo-based IT architecture for different reporting purposes has led to a lack of integrated solutions and hampered compilation processes, increasing inefficiencies during reconciliation procedures:
The ECB concludes that the full implementation of the BCBS 239 principles are unlikely to be achieved in the near future because several banks’ implementation schedules for G-SIBs run until the end of 2019 and beyond. The BCBS encourages local NCAs to check whether D-SIBs institutions can implement such principles within 3 years. In both cases, we can expect the ECB to continue to promote good practices and play an active role in the implementation of such standards at EU and global level.