ECB consults on Guide on effective risk data aggregation and risk reporting

The ECB has launched a public consultation on its Guide on effective RDARR, which aims to strengthen banks‘ capabilities in this area. The Guide specifies and reinforces supervisory expectations, building on industry best practices and taking into account the BCBR’s Principles for effective RDARR (BCBS 239). It does not replace previous guidance but complements it. The focus is on project management and the role of the management body, identified as root causes of insufficient progress in RDARR.
The Guide provides condensed prerequisites for effective RDARR and shares industry best practices. ECB Banking Supervision expects institutions to focus on tangible results and facilitate further progress in governance and risk data aggregation capabilities. The expectations have been verified by the ECB in conjunction with national competent authorities and are based on the application of relevant laws and guidelines.
Adequate capabilities in risk data aggregation are still rare, and banks must improve their governance framework and data management process in a timely manner. The Guide highlights seven key areas for robust governance and effective risk identification, monitoring, and reporting: the responsibility of a bank’s management body; the scope of application of the data governance framework; key roles and responsibilities for data governance; the implementation of a group-wide integrated data architecture; the effectiveness of data quality controls; the timeliness of internal risk reporting; and implementation programs.
Indeed, effective risk data aggregation is crucial for sound decision-making and risk governance in banks, both strategically and operationally. The identified capabilities and practices will help banks better manage group-wide risk concentrations based on quality data, essential for effective risk management during crises like the 2008 financial crisis and the recent COVID-19 pandemic.
Experts from supervised institutions and interested parties are invited to provide feedback until 6 October 2023.
Furthermore, a stakeholder meeting, which will be held in English, will take place on 15 September 2023 at 10:30 CET via the Webex teleconferencing platform. If you are interested in receiving an invitation to the stakeholder meeting, please send an email to bcbs239@ecb.europa.eu. The deadline for stakeholder meeting registration: midnight (24:00) CET on 8 September 2023.
Further information can be accessed on the dedicated RDARR website.