Risk glossary

 

Risk data aggregation

Risk data aggregation is an umbrella term referring to the sorting, merging or breaking down of datasets by banks and other financial firms. The Basel Committee on Banking Supervision’s broad requirements for the practice are laid out in its 2013 principles, popularly known as BCBS 239, which detail rules for “defining, gathering and processing risk data according to [a] bank’s risk reporting requirements to enable the bank to measure its performance against its risk tolerance/appetite”.

BCBS 239 is aimed at preventing a repeat of banks’ failure to quickly trace their exposure to Lehman Brothers and other counterparties during the global financial crisis, as a result of fragmented data standards. Eleven of the principles outline ways for financial institutions to develop a bird’s-eye view of the risks they face across their businesses and legal entities, and three specify the role of supervisors in monitoring and encouraging compliance.

Global systemically important banks were required to comply with the principles by January 1, 2016. However, at the end of 2017, only three G-Sibs were assessed by their supervisors as achieving full compliance with all 14 principles.

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