BCBS239 – Designing an Integrated Control and Reporting

“Mastering leading edge data aggregation and risk reporting
techniques that meet Basel Committee and Financial Stability
Board requirements and optimize financial performance”
BCBS239 – Designing an
Integrated Control and
Reporting Framework for
Accounting and Risk Data
The requirement of BCBS 239 that has proven to be the most challenging for banks is
the need for controls over risk data to be as robust as those applicable to accounting
data. This includes reconciling risk data with banks’ sources, including accounting
data, to ensure its accuracy and creating single, authoritative sources for risk data. This
course examines practical approaches to implementing these requirements.
The course
19th – 20th March 2015
Your Expert Trainers
Allan Grody
Financial InterGroup Holdings Ltd
Peter Hughes
Managing Director
Financial InterGroup (UK) Ltd
Key Benefits Include
•Limited spaces on a first come, first
accepted basis
•Pre-course questionnaire to establish
your individual and business concerns
•Comprehensive take-away course
materials including sample risk
quantification and reporting models
in Excel
•Two academic papers co-authored
by the course facilitators (and others);
“Global Identification Standards for
Counterparties and Other Financial
Market Participants” and “Risk
Accounting: An Accounting Based
Approach to Measuring Enterprise
Risk and Risk Appetite”
•Opportunity for post-course follow-up
and questions
Over several decades banks have invested in the development of tools and techniques aimed at identifying
and quantifying exposure to risk. These range from simple red/amber/green (‘RAG’) assessments to the
application of sophisticated stochastic models. In so doing they acquire and/or create vast quantities of risk
data that are the output of these disparate tools and techniques.
In January 2013 the Basel Committee on Banking Supervision (BCBS) issued its ‘Principles for Effective Risk
Data Aggregation and Risk Reporting’ also referred to as ‘BCBS 239’. This new mandate requires banks to
implement controls over risk data that are as robust as those applicable to accounting data. To ensure accuracy,
risk data should be reconciled with banks’ sources including accounting data. The aim is for banks to create
single, authoritative sources of risk data from which risk management reports can be produced that accurately
and precisely convey aggregated risk data and reflect risk in a manner that is accurate and comparable.
This 2 day solution-oriented course introduces new and innovative techniques, contained in new risk software
designs that address the challenge of how to create single sources of aggregated and reconciled risk data from
the multiple and non-standard risk identification and quantification methods and models that banks typically
use in their day-to-day management of risk.
How will you benefit
You can benefit by engaging with leading experts on risk management, data management and accounting
systems so that you can...
•UNDERSTAND the causes of misalignments between banks’ risk management and accounting systems that
provided the backdrop to the financial crisis
•EVALUATE the directional tendencies of regulatory reform aimed at achieving global financial stability and
the implications for banks’ IT and data architectures
•INTEGRATE conventional risk management and accounting tools and techniques within a common risk data
aggregation and reporting framework
•ALIGN risk appetite setting and financial budgeting to provide fully integrated business plans focused on
optimizing financial performance and risk mitigation
•IMPLEMENT state-of-the-art data management tools and techniques
•LEARN new techniques aimed at developing transaction / product based methods to provide a common
quantitative and qualitative risk reporting framework
•DESIGN strategies that leverage accounting based data aggregation techniques
Register Now:
financial markets training
Contact the marcus evans Training Division:
Nick Cook, Tel.: +44 (0) 203 0023151
Email: NickCo@marcusevansuk.com
BCBS239 – Designing an Integrated Control and Reporting
Framework for Accounting and Risk Data
Day One
Day Two
The Emerging Importance of Risk Data
• The financial crisis: its causes and lessons learned
• The shift in regulatory focus from risk models to risk data
• Reporting frameworks: accounting data vs. risk data
• Understanding risk data and its role in:
– Risk appetite setting and monitoring
– Risk pricing
– Transaction and portfolio management
– Enterprise risk management (ERM)
– Capital adequacy and regulatory capital requirements
– Systemic risk analysis
• Banks’ data management challenges and status
Adapting an Accounting Framework to Risk Data(Risk Accounting)
• Defining the primary reportable components for risk reporting:
– Risk type
– Products
– Geography (location)
• Organizational components and their categorization within a risk reporting
– Transaction processing
– Risk management
– Reference data maintenance
– Business applications (IT) maintenance
– Administration & support functions
• The three pillars of organizational components and how their flawed interaction
creates exposure to risk:
– Manual processes
– Automated processes
• Establishing the benchmark for optimal operating environments
• Measuring deviations from the benchmark and the consequences for risk
• Creating a single source of risk data that is tied to the general ledger
Case Study and Exercise One
The delegates identify their major issues and challenges for data management.
Feedback is discussed and analyzed and common themes are identified.
Accounting Data- Control & Reporting Frameworks
• The general ledger and sub-ledgers
• The financial reporting cycle
• Ensuring data accuracy: proofs, reconciliations and substantiations
• Financial accounting vs. management accounting
• The values, codes and identifiers tagged onto transactions that drive aggregation
• The importance of transaction control totals in financial reporting
• Accounting standards and policies
• The role of auditing
• Overview of an example of legislation applied to financial reporting (Sarbanes
Oxley – USA)
BCBS 239- An In-Depth Examination
• The objectives of BCBS 239
• The Basel Committee’s risk data aggregation expectations for 2016
• The 14 principles and the challenges they represent
• The status of implementation in banks
Case Study and Exercise Two
The delegates compare accounting control and reporting frameworks with BCBS
239. A gap analysis is performed and delegates conclude whether controls typically
applied to accounting data and financial reporting can be applied to risk data and
risk reporting. What are the challenges that must be overcome and the potential
Aligning Accounting & Risk Data
• The core requirements of effective risk data aggregation:
– Common identification standards
– Common unit of risk measurement
• Dealing with multiple, non-standardised risk quantification and assessment
• The treatment of internal risks vs. external risks
• The limitations of monetary value as a unit of risk measurement
• The concept of risk accounting as an extension of management accounting
• Defining a common unit of risk measurement and reporting
• The core risk metrics: maximum potential loss and probability of loss
Designing and Implementing Standardized Risk Tables
• The Value Table
• Product Risk Tables
• Operations Activity Risk Tables
• Best Practice Scoring Templates
Case Study and Exercise Four
The delegates are presented with a Risk Accounting simulation of a complex financial
product. The outputs of the simulation are risk metrics by risk type and a detailed
product risk summary which are evaluated and critiqued.
Regulatory Reform and the Importance of High Quality Risk Data
• An overview of key papers recently issued by the BCBS and FSB aimed at
regulatory reform that require high quality risk data and effective risk data
– BCBS - Balancing Risk Sensitivity, Simplicity & Comparability
– BCBS - Measuring & Controlling Large Exposures
– FSB - A Global Legal Entity Identifier (LEI) for Financial Markets
– FSB - Principles for an Effective Risk Appetite Framework
– FSB - Supervisory Interaction with Financial Institutions on Risk Culture A Risk Management Ecosystem
• The design of a risk management ecosystem for banks
• The key role of data management and risk accounting in the ecosystem
• Further applications of risk accounting:
– Risk based capital management and capital adequacy
– Integrated risk and financial business planning
– Risk adjusted performance measurement (RAPM)
– Stress testing
Case Study and Exercise Three
The delegates analyze a real-life business operating model and calculate core risk
metrics that are used to produce enterprise-wide risk reporting. The outputs are
subsequently evaluated and critiqued.
Register Now:
financial markets training
Contact the marcus evans Training Division:
Nick Cook, Tel.: +44 (0) 203 0023151
Email: NickCo@marcusevansuk.com
about your expert trainers
Allan Grody
Allan is one of the leading academics working at the
forefront of the intersection of risk management, data
management and technology. He is the founder of
Financial InterGroup Holdings Ltd, a strategic consulting
and financial industry joint venture development
company. He has been involved in the financial industry for his entire business
career of nearly five decades. He has had hands on experience in multiple
sectors of the financial industry and has been consulting domestically and
internationally on issues related to financial institutions’ global strategies,
capital and contract market restructuring, industry-wide financial business reengineering, information systems, evolving communications infrastructures,
and risk management methods and systems.
In an earlier career he was the founder and partner-in-charge of Coopers &
Lybrand’s (now PWC’s) Financial Services Consulting Practice. He founded
and taught the only graduate level Risk Management Systems course at
NYU’s Stern Graduate School of Business. He began his business career
with General Electric Credit Corp. and later went on to hold positions in
the investment management business with Neuberger Berman and in the
securities industry with Morgan Stanley’s predecessor firm Dean Witter
Reynolds. He later was an officer with ABN-AMRO’s predecessor bank (now
Royal Bank of Scotland).
He was a founding Member of the Board of Directors of the Technology
Committee of the Futures Industry Association; an Executive Committee
Member of the Emerging Business Council of the Information Industry
Association; an Executive Board Member of the Vietnamese Capital Markets
Committee; and, for nearly a decade, an Advisory Board Member to the
London Stock Exchange’s annual Computers in the City Conference. He is
currently a Founding Board Member of the Journal of Risk Management in
Financial Institutions, a member of the Blue Ribbon Advisory Panel of the
Professional Risk Managers International Association, and the Chairman
of the Advisory Board of the Financial Industry Ontology for Risk and Data
(FIORD) consortium, and an advisor to the Financial Stability Board on their
global identification initiative and their data aggregation working group.
Peter Hughes
Peter Hughes is a former banker with JPMorgan Chase,
Fellow of the Institute of Chartered Accountants in
England & Wales and a Visiting Fellow at the Leeds
University Business School.
Peter is a risk management, accounting and audit expert
specializing in cross-enterprise risks, operational risk, data management,
Basel II & III, capital management (including the Internal Capital Adequacy
Assessment Process - ICAAP), risk measurement and management systems
and risk based auditing. He was formerly a country / area executive with
JPMorgan Chase.
As a consultant and trainer, he has worked with a number of leading banks,
rating agencies, global IT companies, consulting firms, trade associations and
banking institutes in the UK, South Africa, Qatar, Egypt, Abu Dhabi, Kuwait,
Mauritius, Romania, Italy, Croatia, Slovakia, Bosnia, Russia, India, Pakistan,
USA, Canada, Jordan, Uganda, Tanzania, Rwanda, Ghana, Nigeria, Liberia
and the Philippines.
In his 27 year career with JPMorgan Chase he was Regional Audit Manager
(South America), Regional Head of Finance Shared Services (EMEA), Chief
Auditor (Brazil), Country Operations Executive (Brazil), Country Senior
Financial Officer (Brazil), Chief Operating Officer (Germany), Acting Head
of Treasury & Trading (Germany) and Global Head of Risk Management –
Shared Technology & Operations.
who should attend?
This course offers an ideal forum in which to bring together executives,
senior managers and key personnel from infrastructure functions at
financial firms including:
• Finance
• Risk management
• Operations & IT
• Data management
• Audit
• Compliance
What people are saying
about this course
“Inspiring, good tool-set to start”
“Fascinating, at times an eye-opener”
Bank for International Settlements
“Useful, course well structured”
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Register Now:
Contact the marcus evans Training Division
Nick Cook, on:
Tel.: +44 (0) 203 0023151