The implementation of Basel Committee BCBS 239: Critical analysis of the new rules for data management

In January 2013, the Basel Committee on Banking Supervision issued 14 principles for effective risk data aggregation and risk reporting (BCBS 239) and outlined the paths to compliance for globally systemically important banks (GSIBs) and domestically systemically important banks (DSIBs).The Basel Committee devised BCBS 239 in order to ensure that banks and other financial institutions could monitor risks more effectively through superior data aggregation, enabling an overall more reliable and efficient risk management process. In a McKinsey report from June 2015[1] it is estimated that an average GSIB would have to spend approximately 230m USD and an average DSIB 75m USD to aggregate risk data that was previously dispersed over a wide variety of systems, geographic locations and banking groups. As the BCBS 239 for GSIBs deadline is – at the time of writing – 10 months overdue, what approach towards compliance will prove to be more effective? In this article, the new principles according to BCBS 239 are described, criticised and one possible solution to meet the requirements is presented.