Learning objectives: Explain the potential benefits of having effective risk data aggregation and reporting. Describe the impact of data quality on model risk and the model development process. Describe key governance principles related to risk data aggregation and risk reporting practices. Identify the governance framework, risk data architecture and IT infrastructure features that can contribute to effective risk data aggregation and risk reporting practices. Describe characteristics of a strong risk data aggregation capability and demonstrate how these characteristics interact with one another. Describe characteristics of effective risk reporting practices. Describe the role that supervisors play in the monitoring and implementation of the risk data aggregation and reporting practices.
Questions:
20.11.1. GARP explains that the Basel Committee on Banking Supervision's standard number 239 (aka, BCBS 239) "was a major driver in the rise of the chief data officer (CDO) function. The CDO is typically responsible for standardizing a firm’s approach to data management." In addition, which of the following statements is also TRUE about the Basel Committee on Banking Supervision's standard number 239 (aka, BCBS 239)?
a. BCBS 239 offers the advantage of a uniform blueprint for a compliant IT infrastructure
b. Every systematically important financial institution (SIFI) complied with the original timeline
c. Compliance with BCBS 239 is a subjective exercise and the standards for each bank are bespoke
d. While praised for its theory, critics say BCBS 239 forgets to address risk management data and models
20.11.2. Relative to the other principles, compliance rates have been stronger for the Risk Reporting Practices outlined in BCBS 239. In regard to effective risk reporting, each of the following is true EXCEPT which is false?
a. Aggregated data should be Material, Conservative, Elastic, and Cost-based (Principles 3 to 6)
b. The four primary types of data models include: semantic data, conceptual data, logical data, and physical data.
c. Compliance rates are generally poor, or at least lagging, for Principle 2 (Data architecture and IT infrastructure)
d. Adaptability (Principle 6) matters because a bank should be able to generate a range of on-demand, ad hoc requests including, for example, integrated stress scenarios or upcoming regulations
20.11.3. GARP notes that "banks also have significant progress to make when it comes to the BCBS 239 principles on effective risk reporting practices." Recall that Principles 7 through 11 refer to effective risk reporting practices. In regard to effective risk reporting, which statement is TRUE about the requirements of BCBS 239?
a. Reports should be made as frequently as possible
b. Reports should be accurate, useful, and should comprehensively cover all risk types
c. Reports should include Pillar 1 risks and should exclude Pillar 2 risks for the sake of client confidentiality
d. Timely reporting is a non-negotiable item because there should be no compromises in the timeliness principle
Answers here:
Questions:
20.11.1. GARP explains that the Basel Committee on Banking Supervision's standard number 239 (aka, BCBS 239) "was a major driver in the rise of the chief data officer (CDO) function. The CDO is typically responsible for standardizing a firm’s approach to data management." In addition, which of the following statements is also TRUE about the Basel Committee on Banking Supervision's standard number 239 (aka, BCBS 239)?
a. BCBS 239 offers the advantage of a uniform blueprint for a compliant IT infrastructure
b. Every systematically important financial institution (SIFI) complied with the original timeline
c. Compliance with BCBS 239 is a subjective exercise and the standards for each bank are bespoke
d. While praised for its theory, critics say BCBS 239 forgets to address risk management data and models
20.11.2. Relative to the other principles, compliance rates have been stronger for the Risk Reporting Practices outlined in BCBS 239. In regard to effective risk reporting, each of the following is true EXCEPT which is false?
a. Aggregated data should be Material, Conservative, Elastic, and Cost-based (Principles 3 to 6)
b. The four primary types of data models include: semantic data, conceptual data, logical data, and physical data.
c. Compliance rates are generally poor, or at least lagging, for Principle 2 (Data architecture and IT infrastructure)
d. Adaptability (Principle 6) matters because a bank should be able to generate a range of on-demand, ad hoc requests including, for example, integrated stress scenarios or upcoming regulations
20.11.3. GARP notes that "banks also have significant progress to make when it comes to the BCBS 239 principles on effective risk reporting practices." Recall that Principles 7 through 11 refer to effective risk reporting practices. In regard to effective risk reporting, which statement is TRUE about the requirements of BCBS 239?
a. Reports should be made as frequently as possible
b. Reports should be accurate, useful, and should comprehensively cover all risk types
c. Reports should include Pillar 1 risks and should exclude Pillar 2 risks for the sake of client confidentiality
d. Timely reporting is a non-negotiable item because there should be no compromises in the timeliness principle
Answers here:
