SAS research: Data dilemmas plague bank compliance
Reporting risk to regulators hampered by separate systems, inflexible sources
Increasing regulatory pressure requires banks to improve risk aggregation and reporting. Yet a majority struggle with data inconsistencies, says a recent SAS survey. This technical hurdle was pinpointed by 81 percent of banks surveyed. More than half also face difficulties from separate risk systems and inflexible sources.
SAS surveyed 27 global financial institutions about the Basel Committee’s Principles for Effective Risk Data Aggregation and Risk Reporting. Also known as BCBS 239, the principles aim to increase transparency and reduce operational risks. Adherence to these principles allows banks to improve stress testing and anticipate future problems.
An overwhelming majority of firms seemed skeptical of their ability to prove data origin – a requirement of BCBS 239. Some 67 percent saw room for improvement and 22 percent identified a need for significant investment.
The institutions were also asked if they expected BCBS 239 compliance initiatives to deliver ancillary business benefit. Many anticipated achieving a more holistic organizational view of risks, with 22 percent citing improved stress testing capabilities and 30 percent needing a more holistic view of firm-wide risks.
“In the regulatory-compliance future, stress testing will be an ongoing process of analyzing unpredictable scenarios instead of an annual exercise devoid of surprise,” said David M. Wallace, SAS Global Financial Services Marketing Manager. “Banks that fully implement BCBS 239 principles as best practices will be able to analyze surprise scenarios on demand for regulators. In addition, they’ll be more effective and efficient in capital planning.”
SAS provides a range of solutions to help firms meet the BCBS 239 principles from risk data quality and management, data lineage, risk aggregation, visualization and reporting, and stress testing.
To compare your firm’s readiness for BCBS 239 to the SAS survey results, read the report paper Industry Challenges: Implementing Effective Risk Data Solutions.
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