RegTech Intelligence

Risk data aggregation: it’s all in the interpretation

In their latest landscape assessment of Basel III, the EBA came to a conclusion regarding a problem the industry has been grappling with for a long time: rules that aren’t detailed enough lead to uneven outcomes in data reporting, aggregation and assessment.

The report finds that, while data quality from national regulators has improved and is of ‘sufficient’ quality for analysis, it could be better.  A key problem is that conflicting data for liquidity risk positions could be attributed to ‘differing interpretations of the rules’, rather than actual risk differences.  The writing, then, is on the wall: the banks have the data they need but, without clear standards, metrics and use cases as to exactly how the rules should be applied, they will not produce the kind of information the regulator requires.

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