Dear,
As you all know the starting of the Financial Crisis in 2007-2008 represented an inflexion point in the implementation of a regulatory framework in the Financial System.
A particularly important milestone is the document from the Basel Committee on Banking Supervision: "Principles for effective risk data aggregation and risk reporting".
http://www.bis.org/publ/bcbs239.pdf
The fourteen principles "recommended" by the committee define the architecture that banks have to implement in order of being compliant in the new financial system that is emerging from the Financial Crisis.
This represents a huge endeavor which will attract a very important part of the banks resources, and taking the wrong decision can seriously jeopardize the bank´s future capabilities.
Recently I had a very interesting conversation with a client about the capabilities of SAP Bank Analyzer for fulfilling IFRS 9 and IFRS 15 requirements.
During the conversation; the client mentioned that the current bank´s IT priority is the centralized management of risk data.
Actually, what they had in mind are the 14 principles of the Basel Committee, let´s see how the IFRA of Bank Analyzer is the best answer to them.
Principle 1
Governance – A bank’s risk data aggregation capabilities and risk reporting practices should be subject to strong governance arrangements consistent with other principles and guidance established by the Basel Committee.
SAP Bank Analyzer proposal.
The Financial Database is a centralized and robust repository of the risk data, and properly build, provides the Single Source of Truth for all the bank´s risk data, which is the foundation for strong reporting capabilities.
In a complex landscape of Transactional Systems, only the Source Data Layer of Bank Analyzer provides the Single Source of Truth for the bank´s Master and Transactional Data, which is currently spread in multiple systems with heterogeneous data-models.
Processing this Single Source of Truth data in an homogenous centralized system for calculating the Accounting and Solvency position of the bank is the responsibility of the Bank Analyzer - Process and Methods Layer.
Storing the calculation results in homogenous and consistent repository of metadata is the Results Data Layer main capability.
Finally, reporting this data with very strong analytical and reconciliation capabilities is the value proposition of the Analytical Layer.
Principle 2
Data architecture and IT infrastructure – A bank should design, build and maintain data architecture and IT infrastructure which fully supports its risk data aggregation capabilities and risk reporting practices not only in normal times but also during times of stress or crisis, while still meeting the other Principles.
SAP Bank Analyzer proposal.
Bank Analyzer fully supports the Stress Testing requirements for Solvency and Liquidity established by the Basel agreements. But more than that, the completeness of the data model, opens the gate to implement new risk engines for fulfilling future requirements, without modifying the data architecture.
Principle 3
Accuracy and Integrity – A bank should be able to generate accurate and reliable risk data to meet normal and stress/crisis reporting accuracy requirements. Data should be aggregated on a largely automated basis so as to minimise the probability of errors.
SAP Bank Analyzer proposal.
The Bank Analyzer architecture offers strong Extract and Transformation capabilities and a complete template of Primary Objects which will assure data accuracy, assuming of course that the implementation team has the capacity and willingness to follow the SAP´s implementation best practices.
This is just an introduction. It´s very difficult to express in just one post the implications all these principles, but we will discuss this topic again in future posts.
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860
Looking forward to read your opinions.
K. Regards,
Ferran.
As you all know the starting of the Financial Crisis in 2007-2008 represented an inflexion point in the implementation of a regulatory framework in the Financial System.
A particularly important milestone is the document from the Basel Committee on Banking Supervision: "Principles for effective risk data aggregation and risk reporting".
http://www.bis.org/publ/bcbs239.pdf
The fourteen principles "recommended" by the committee define the architecture that banks have to implement in order of being compliant in the new financial system that is emerging from the Financial Crisis.
This represents a huge endeavor which will attract a very important part of the banks resources, and taking the wrong decision can seriously jeopardize the bank´s future capabilities.
Recently I had a very interesting conversation with a client about the capabilities of SAP Bank Analyzer for fulfilling IFRS 9 and IFRS 15 requirements.
During the conversation; the client mentioned that the current bank´s IT priority is the centralized management of risk data.
Actually, what they had in mind are the 14 principles of the Basel Committee, let´s see how the IFRA of Bank Analyzer is the best answer to them.
Principle 1
Governance – A bank’s risk data aggregation capabilities and risk reporting practices should be subject to strong governance arrangements consistent with other principles and guidance established by the Basel Committee.
SAP Bank Analyzer proposal.
The Financial Database is a centralized and robust repository of the risk data, and properly build, provides the Single Source of Truth for all the bank´s risk data, which is the foundation for strong reporting capabilities.
In a complex landscape of Transactional Systems, only the Source Data Layer of Bank Analyzer provides the Single Source of Truth for the bank´s Master and Transactional Data, which is currently spread in multiple systems with heterogeneous data-models.
Processing this Single Source of Truth data in an homogenous centralized system for calculating the Accounting and Solvency position of the bank is the responsibility of the Bank Analyzer - Process and Methods Layer.
Storing the calculation results in homogenous and consistent repository of metadata is the Results Data Layer main capability.
Finally, reporting this data with very strong analytical and reconciliation capabilities is the value proposition of the Analytical Layer.
Principle 2
Data architecture and IT infrastructure – A bank should design, build and maintain data architecture and IT infrastructure which fully supports its risk data aggregation capabilities and risk reporting practices not only in normal times but also during times of stress or crisis, while still meeting the other Principles.
SAP Bank Analyzer proposal.
Bank Analyzer fully supports the Stress Testing requirements for Solvency and Liquidity established by the Basel agreements. But more than that, the completeness of the data model, opens the gate to implement new risk engines for fulfilling future requirements, without modifying the data architecture.
Principle 3
Accuracy and Integrity – A bank should be able to generate accurate and reliable risk data to meet normal and stress/crisis reporting accuracy requirements. Data should be aggregated on a largely automated basis so as to minimise the probability of errors.
SAP Bank Analyzer proposal.
The Bank Analyzer architecture offers strong Extract and Transformation capabilities and a complete template of Primary Objects which will assure data accuracy, assuming of course that the implementation team has the capacity and willingness to follow the SAP´s implementation best practices.
This is just an introduction. It´s very difficult to express in just one post the implications all these principles, but we will discuss this topic again in future posts.
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860
Looking forward to read your opinions.
K. Regards,
Ferran.
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