Six things to demand from your Risk Technology
Given events in the financial sector in the past decade, it’s safe to say all eyes are on risk. In the context of lessons learned from the financial crisis, the Basel Committee on Banking Supervision in its BCBS 239: Principles for Effective Risk Data Aggregation and Risk Reporting has deemed legacy bank IT and data architectures “inadequate to support the broad management of financial risks,” forcing global banks to invest in more sophisticated risk technology.
With regulatory deadlines looming in January 2016 for large organisations, and eventually smaller financial institutions over time, it is fair to say that for most banks, compliance is not just a box-ticking exercise, sufficient to get through the stress-testing requirements. With the business case for ‘fit for purpose’ risk technology in place there is an appreciation of the business insights and competitive advantages – not to mention better use of risk capital – that smart risk technology offers. As recent events have shown, risk stress testing capabilities play a substantial role in banks’ capital distribution plans, and continue to be under regulatory scrutiny.
Increasingly firms are recognising the opportunity to build on existing or adopt new risk management systems that will enable sustainable growth. 89% of respondents to an EY survey this year view BCBS 239 as an ‘enabler’ for their enterprise-wide risk data management capability – a chance for a risk-tech health-check and overhaul, to shape their IT strategy and develop their IT infrastructure, rather than simply as a regulation to comply with.
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