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ECB Launches Consultation on Guide Urging Banks to Improve Risk Data Aggregation and Reporting

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The European Central Bank (ECB) has launched a public consultation covering its Guide on Effective Risk Data Aggregation and Risk Reporting, noting that ‘adequate capabilities in this area are still the exception, and banks have to improve their risk data aggregation frameworks, also in light of the BCBS principles’. Ultimately, banks are expected to step up and conclude efforts to improve governance frameworks and data management processes in a timely manner.

The guide outlines prerequisites for effective risk data aggregation and risk reporting (RDARR) to help banks strengthen their capabilities by building on good practices observed in the industry. It specifies and reinforces supervisory expectations including the Basel Committee on Banking Supervision’s Principles for effective risk data aggregation and risk reporting enshrined in BCBS 239, and complements rather than replaces guidance provided since 2016 in public communications and institution specific supervisory activities.

By way of background, in 2016, the ECB launched a thematic review on effective risk data aggregation and risk reporting, which revealed serious weaknesses within a sample of 25 significant institutions and found that many of their practices were unsatisfactory. Overall, the results of the thematic review and the findings from on-site inspections demonstrated that the implementation of BCBS 239 was unsatisfactory and a cause for concern.

In 2019, the ECB issued a letter to all significant institutions under its direct supervision, urging them to make substantial and timely improvements to their risk data aggregation capabilities and risk reporting practices and to implement integrated reporting solutions.

The 2023 guide is part of a wider strategy intended to ensure that supervised banks achieve substantial progress in remedying identified structural shortcomings in risk data aggregation.

The public consultation ends on 6 October 2023. As part of the process, the ECB will organise a stakeholder meeting during the consultation period, bringing together relevant experts at supervised institutions and other interested parties. Further information can be found on the ECB Banking Supervision website

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