BCBS239: The art and science of data aggregation

Aggregating company-wide financial and risk information has arguably always been one of the most daunting challenges for large banks and other financial institutions.

The fact that firms should be in a position to aggregate risk and financial data in order to analyse, investigate and manage risk – and subsequently make sound business decisions – is beyond doubt. The question is: how?

Large firms typically have many disparate systems and separate processes, often spread across numerous legal entities supporting many lines of business and products. Frequently, each source of risk or financial data has different formats, standards or interfaces and often companies have their own terminology, language and even internal descriptions for risk and financial information. This is compounded by legacy technologies and processes, which only complicate and hinder changes needed to meet regulatory requirements. 

Companies have tended to view risk aggregation as a technical issue, focussing on new technologies and tools with exciting new functionalities. Many then realise that the solution to the problem is just as much about data standards and governance as it is about technology. 

This paper examines the art and the science of aggregation, exploring how to best tackle some of the governance, data and technical issues in order to meet the challenges of company-wide risk and financial data aggregation.