At the Data Governance Financial Services Conference in New York City this week, presenters and attendees alike were buzzing about BCBS 239. As they should be! While the internationally recognized Basel Committee on Banking Supervision (BCBS) published their Principles for effective risk data aggregation and risk reporting back in January 2013, the three year head start to comply is looming. These principles are a positive force in the industry, aimed at mitigating systemic risk across large banks; a factor contributing to the 2008 financial collapse. Both Global and Domestic Systemically Important Banks (G-SIBs & D-SIBs, respectively) are in the crosshairs and expected to follow suit by the time the ball drops in Times Square in 2016.
By now, banks have been self-analyzing and reporting their assessments and the Bank for International Settlements, or BIS, has given some additional color to their guidelines to help give banks a better idea of what to expect and where their peers are.
There are questions from regulators around strictness in the first go around. They are expected to be more lenient in testing and less invasive in terms of enforcement of penalties like fines and capital add-ons. Banks are in a bit of a grace period now, and should use it to really get a leg-up so they are not under the gun later.
In addition to the hot topic of BCBS 239, here are three takeaways from the Data Governance Financial Services Conference:
Feel the spirit of the principle – Feelings and spirits are more often discussed in a rhythmic yoga session or a sweat lodge—these are not hard-fast rules. They're more similar to laws where regulators are tasked with judging how well the bank is following the spirit or the intent of the principle.
Focus on the most Critical Data Elements (CDEs) – spend your time on the data elements with the biggest risk profile. Don’t boil the ocean. You probably don’t have all the people and budget you’d want. Regulators will hopefully be happy to see that you provided the best result with the time you had (while giving time to improve and lobby for budget next time, of course!)
People will be your saving grace, not IT – from traditional unwieldy technology solutions with complex data flows, to enabling and empowering your data stewards and SME’s to get the access the understanding they need quickly to assess and report on what they need to. Don’t overdo it on technology. Get the right people in place to amplify the effectiveness of your strategy.
It’s an uncertain but exciting time for data professionals in the Financial Services industry. Those able to put limited available headcount in the right place and acquire the right kinds of technology will be better off. How do you think your organization would fair against the BCBS 239 principles?
