The Financial Stability Board recommended the development of a set of supervisory expectations to move data aggregation capabilities of financial firms – particularly significantly important ones – to a level where supervisors, firms and other users of the data, such as resolution authorities, can be confident that the Management Information Systems reports accurately capture the risks. Subsequently, the Basel Committee on Banking Supervision (BCBS) established the Principles for effective risk data aggregation and risk reporting in 2013.
The Principles are broken down into four complementary sets: governance and infrastructure; risk data aggregation capabilities; risk reporting practices; and supervisory review.
The BCBS has acknowledged that there are interactions and relationships between these principles. For instance, poor data governance and information technology infrastructure can have a negative impact on a bank’s risk data aggregation capabilities. This, in turn, can negatively affect the quality and the timeliness of risk reporting.