BCBS239: Reasons, impacts, framework and route to compliance

Abstract

In January 2013, the Basel Committee on Banking Supervision (BCBS) published its BCBS239: ‘Principles for Effective Risk Data Aggregation and Risk Reporting’. The guidelines describe 14 principles that are intended to strengthen global, systemically important banks’ (G-SIBs’) risk-data aggregation capabilities and internal risk-reporting practices. The effective implementation of the principles is expected to enhance risk management and decision-making processes at banks and increase G-SIBs’ ability to cope with stress and crisis situations. This paper describes the requirement of such guidelines in light of G-SIBs’ current data problems along with the impact on these G-SIBs’ data management capabilities. It also describes the current status of these banks according to BCBS publications and how they are faring with respect to the various principles and their attainment. Finally it provides a framework for G-SIBs to achieve BCBS239 compliance with respect to defining and prioritising key data elements for risk management along with a data dictionary; data architecture including data quality framework, data lineage and data flow; physical data objects like databases, interfaces, services etc; and risk reporting and data consumption.