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Banking on Your Future: BCBS 239

12 December 2014  |  3671 views  |  0

The last financial crisis has taught us many lessons, with one of the most significant being the importance of data risk management.  And while the BCBS 239 paper’s 2016 deadline feels like a concern for tomorrow, the threat of another crippling financial disaster is very much a worry for today, and should be motivation enough to get the ball rolling.

The Basel Committee on Banking Supervision’s BCBS 239 principles, introduced to transform the way risk data management and reporting is carried out internationally, expect banks to be underway to meeting their January 2016 deadline. 

On top of that, the BCBS 239 principles will not only affect the already named G-SIBS (those subject to additional capital requirements), but will soon also touch additional D-SIBS named by local banking authorities, who will only have three years to meet compliance. 

The list of principles is thorough and could be overwhelming to tackle all at once, but time is running out fast.  Covering everything from IT infrastructure to governance and timeliness, the principles are an opportunity for firms to renovate, innovate, and proof their business with the most effective people and processes in place. 

By answering the following three questions, you can get the ball rolling to meet compliance ahead of schedule and encourage business growth and productivity.

1. Where do you stand now?

It is important to get a sense of your firm’s strengths and weaknesses on data risk management as they stand now in order to eventually meet compliance.  Understanding the degree to which you already comply will help you to get a holistic and aggregated view of enterprise data risks.  Use the BCBS 239 paper as an opportunity to truly assess the entire organisation, taking into account not only the risks of today, but also the potential threats of the future. 

For many years to come, supervisors will be asking for documentation and proof, which highlights the need for process.  Before any changes can be made, a complete and independent assessment across departments is required to fully understand the risk data weaknesses within the organisation.  

2. How are you using your technology?

The recent financial crisis taught us that real-time and aggregated data is fundamental to avoiding risk.  What better method is there to keep up with this data than using technology?  Technology provides everything you need to stay on top of the changing nature of data risk management.

This being said, BCBS’s report, ‘Progress in adopting the principles for effective data risk aggregation and risk reporting’, revealed that banks feel they are currently least compliant with having a strong IT infrastructure and  data architecture.  It is important to ask yourself how you are using technology to maximise data risk management in order to achieve the most productive results.

Make the most of technology and take advantage of its speed, agility, scalability, and flexibility to get complete and in-depth reports on the risk companies face.

3. Do you have the right people on the job?

While technology is essential to maximising productivity and processing data, many aspects of data risk management still come down to people.   People are crucial in turning data into intelligence and managing information, and must be well informed to understand the ins and outs of metadata and data lineage.  The BCBS 239 principles will transform the way teams deal with risk, and it is this process that will allow people to help the organisation meet compliance.  After all, it is people who will be making decisions regarding your data risk management, so make sure these decisions are informed. 

The BCBS 239 principles are transforming the way we approach data risk management, which can seem overwhelming.  However, this transformation is in fact an opportunity to modernise IT and avoid another financial crisis.  By starting now and answering these three important questions, you’ll be on your way to meeting compliance before the 2016 deadline and taking in all the benefits that go along with it.

 

 

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