Risk data aggregation and risk reporting roles and principles

The financial crisis of 2007-08 highlighted the fragile state of risk data and risk reporting capabilities of banks (and) financial organizations globally. In response, the Basel Committee on Banking Supervision (BCBS) issued the regulation BCBS 239 - “Principles for Effective Risk Data Aggregation and Risk Reporting” directing banking (or) financial organizations to strengthen their risk data aggregation capabilities and risk reporting practices. The BCBS239 regulation focuses on the need for robust Risk Data Aggregation and Risk Reporting (RDARR) governance, architecture, and infrastructure. The requirements address risk data accuracy, integrity, completeness, timeliness, and adaptability. The above-mentioned regulation also focuses on risk reporting accuracy, comprehensiveness, clarity and usefulness, frequency and distribution. A strong data governance environment translates into reliable and timely data which is critical for any banking (or) financial organization in achieving its strategic objectives. For instance:

•Country Codes: accuracy in the application of Country Codes is essential for abanking (or) financial organization to perform analysis by country and regionalgroupings to assess exposure, market share, limits, profitability, and the managementof concentration risk.

•SIC Codes: accuracy in the application of SIC Codes is essential for risk analysis byindustry groupings and the management of concentration risk as well as banking (or)financial organizational sector limits.