Until now, awareness of BCBS Principles for Effective Risk Data Aggregation and Risk Reporting has largely been confined to a privileged few.
Thomson Reuters has now achieved first mover advantage in the race to the board room with this conversation with an expose of how regulators and firms are moving at different speeds on this $80 Billion IT problem.
Rachel Wolcott, writing for Accelus’ Compliance Complete, has discovered:
- The BCBS have issued a stock-taking questionnaire which allows banks to assess themselves on a 4-point scale. National regulators will then collect these self-assessments after July and review banks’ compliance;
- The FSA has been active in checking-in with banks to make sure that self-assessments are planned and that banks are in no doubts about the seriousness of these new rules;
- The Principles for Effective Risk Data Aggregation were an attempt by the BCBS to be more prescriptive, however, they leave significant room for interpretation, as does the stock-taking questionnaire itself.
PJ Di Giammarino, CEO of JWG, had this to say: “Awareness on this subject is very low. The draft principles came out during the Olympics. Basel received only nine responses to their consultation. Only a few banks here in the UK are actively assessing their preparedness, most of them because their progress is being monitored closely by their supervisory teams.
It’s the second quarter already, and there’s a whole class of major banks that have not focused on this topic yet. Most big risk managers we speak to are scratching their heads about these principles and saying: ‘Wow, it could mean any of a number of things to us. I don’t really know how we measure up versus our peers’.
The challenge is that some deep and potentially high-impact requirements are included, for example that aggregation must be timely and flexible and provide ways of monitoring for accuracy and completeness. So, for example, one question could be: what constitutes a timely response and how do I know the firm’s infrastructures are flexible enough? People will have different views about what these 14 principles mean.”
 ‘Total Worldwide Risk IT Spending Forecast to Reach $80 Billion by 2017’, http://www.idc-fi.com/getdoc.jsp?containerId=prUS24053713