The Basel Committee’s BCBS239 principles: A Single Source of Truth

The Basel Committee's BCBS239 principles, also known as PERDARR (Principles for Effective Risk Data Aggregation and Risk Reporting), comes in to force from 1 January 2016.

Why do you need BCBS239?

Put simply, banks need to anticipate problems and need a single source of truth to do so.
Data aggregation is a well-known and well understood challenge in the banking industry. The investment to improve IT infrastructure, data integrity and completeness, together with reporting capabilities can be vast.

8 years on from the start of the global financial crisis, there is still a real need for banks to strengthen their risk data aggregation capabilities and risk reporting practices. Indeed a large percentage of the major banks are trying to cope with inconsistent data sources, formats and structures as they seek to comply with new rules on risk data.
The ability to accurately aggregate risk data and operate a robust data framework is fundamental for anticipating as well as mitigating future issues.
Banks need to be able to make sound judgements based on the best available data, in order to enhance both risk management and strategic decisions, reduce the probability of losses and in turn increase profitability.

As stated by the Basel Committee, risk data aggregation and risk reporting capabilities are clearly linked - high quality risk management reports rely on the existence of strong risk data aggregation capabilities, and sound infrastructure and governance ensures the information flow from one to the other.
Banks need to develop forward looking capabilities to provide early warning of any potential breaches of risk limits that may exceed banks risk tolerance and risk appetite.