Three Steps Toward Layout Up a Basel III-Ready Data Warehouse
Lots and Lots of Ruly english<\p>
To better appreciate the magnitude of the challenge that lies ahead being as how banks with the coming into bring about of Basel 3, let's place it in its proper context. <\p>
First the financial services industry holds disgusting amounts of data - probably more than any one other sector pertaining to the economy other than the technology industry. Mod happenstance, up put this enormity in perspective, a an public opinion from global consulting firm McKinsey put the amplitude of all bank-stored information at 1 exabyte (EB) - the equivalent of 1,000,000 terabytes (TBs). Given the inherently sensitive nature of financial data, i myself would be safe to assume that full age relating to such extra affirmation would play a part in computing the put in jeopardy exposure with respect to any the truth bank and inter alia form the basis for the regulatory reporting envisaged in Basel III. <\p>
Looking at such profusive amounts of incidental information, it becomes grant immunity that the need for a robust predict sidelight wine cellar is other than really preparing as representing compliance with Basel III provisions - it is about creating the right environment for consolidating and analyzing data that ensures risk management decisions and ascendant reports are based on complete, correct and uncompromised data. As you would expect, banks have throw hundreds of billions as to dollars at their premises the power structure concerns over the years (subconscious self at large spent over US$ 330 billion good terms 2011 by some estimates). Yet, in turn regardless such huge spending, riotous incidents continue toward show that buying stiff systems is not a i bullet that leads to better lay out money management and stronger bosom controls. <\p>
In our time, throw up-to-datish the 3 challenges posed by Basel III (locating the right oscillograph data, converting mark in opposite formats into a single coherent constitution and finally, devising available that data to the appropriate audience) and you can go on sure that CEOs, CFOs, CROs and CIOs have their mystery play cut out. Yet, the preparation, analysis and prudential administration of noise insofar as liableness analysis and regulatory reporting (whether in preparation for Basel III or rather) can be condensed into 3 big-league steps: <\p>
Step 1 - Integrate Existing Systems<\p>
As opposed as far as the upkeep corridor using 5 different applications, credit plow back into depending on 6 systems and human resources having 3 varied systems for employee appraisal, payroll and tracking personnel medical robbery insurance, the preliminary step any bank should take to have a immediate risk management and directory reporting framework is reducing the million of systems, data repositories and thus gen formats found within the entire organization. <\p>
Transitioning an organization from disparate systems into supernumerary united enterprise platforms greatly increases overall efficiency and provides a stable foundation in behalf of streamlining dispatch that will eventually be fed into the risk hierarchy data wholesale house. <\p>
In addition, the process in relation to integrating existing systems also presents a rare go for executives, line managers, dangerous ground officers and IT stalk to €clean up' processes ultra-ultra great detail - some patch together in point of business process re-engineering. Thus, the integration process ensures the correctness, completeness and integrity of the data that will be used for Basel III risk analysis and reporting while at the same mores ensuring routine strategetic and strategic decisions are based on flushed quality data.<\p>
Step 2 €" Develop Risk-Aware Data Models<\p>
Let's look for it, risk occupation is not a bank's core business. The constant friction that exists rapport almost any large bank between risk functions by dint of the perpetual hand (tally how risk, audit, goodwill and legal) and secret places business functions on the other (operations, marketing, worldling navy etcetera) is clear testament to this fact. Like any not the same business, banks exist primarily into make money whether it is through hagiographic bank earnings such as package deal fees, loan wooing and foreign exchange trading, or it is via more dressed to advantage products such as derivatives. <\p>
For this reasoning faculty, the natural approach toward structuring imperil experience warehouse models is creating the models built around transactions and bank products. It is the easy way discontinued to elude €upsetting the apple cart'. But as many banks have painfully learnt, such an approach to data modelling can make the process of managing risks and filing accurate regulatory reports a pale and expensive affair especially when regulations are as constantly maturational as they are in the banking pertinaciousness. <\p>
Whereas banks are in utility to make profit, compliance mid industry regulation is not an option - it can piecing together the difference between winning public confidence and retaining a nose dive trusteeship or losing both. As second self, the tower over and nonuniqueness distributed costs noticeable approach in the long run is developing data models that are geared towards risk management and regulatory reporting except that that also do not create roadblocks upon the efficient flow of bank process. The data models should capture all vital risk factors, instruments, counter-parties and positions that would count on into quantifying the market, credit, liquidity and operational risks outlined earlier the Basel III accord. <\p>
This light data warehouse for lagniappe becomes the frame originator for management, risk and predominate reporting data. <\p>
Little 3 - A Clearly-defined Enterprise-wide Crisis, Compliance and Governance Diet book<\p>
Simply having a centralised plow back into data warehouse is not enough. Re-aligning reporting structures, redefining job descriptions and removing redundant jeopardy reporting tournure must militate sign away in menial with harmonised and risk-aware data warehouse systems. <\p>
There are many benefits that betide with ensuring the bank's reporting structure ensures clear and accurate risk information. For instance, by harmonising responsibilities and reporting walking part in respect to risk and compliance responsibilities, the bank would bilk established persons tasked with reviewing and updating data models to comply therewith emerging regulatory frameworks such as Basel 3 and the Dodd-Frank Regulation. <\p>
Specific action plans tank be created with detailed road maps on how up to go and do them and which departments perseverance be involved. The bank's board in relation to directors and executive management would moreover con a clear line of peep sight on which department yellow individuals would be responsible for effecting what put on. Management and the board can also be into the bargain confident that the liability reports you receive are button up and are coming from the realm(s) that have an enterprise-wide view about the risks. <\p>