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.
2nd –3rd March 2015
New York City, USA
The Course
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.
Your Expert Trainer
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.
Peter Hughes
Managing Director
Financial InterGroup (UK) Ltd
Allan Grody
Financial InterGroup Companies
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
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 that optimise risk based
capital management and enhance your bank’s ICAAP (internal capital adequacy assessment process)
What People Are Saying About This Course
“A good summary of the current state of risk reporting, some good ideas to consider”
“Fascinating, at times an eye-opener”
Bank for International Settlements
“Very useful materials balanced with current context and political environment”
BBVA Compass
Register Now:
financial markets training
Contact the marcus evans Training Division:
Nick Cook, Tel.: +44 (0) 203 0023151
Email: NickCo@marcusevansuk.com
Meeting the Challenges of Risk Data Aggregation
and Reporting
Day 1
Day 2
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 framework:
– Transaction processing
– Risk management
– Reference data maintenance
– Business applications (IT) maintenance
– Administration and 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 reporting
• 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 benefits.
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 methods
• 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 aggregation:
– 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) 20 3002 3151
Email: NickCo@marcusevansuk.com
About Your Expert Trainers
Allan Grody is one of the leading academics working at the forefront of the intersection of risk management and data
management. 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
re-engineering, 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.
Peter Hughes is a former banker with JPMorgan Chase, Fellow of the Institute of Chartered Accountants in England & Wales and
a Visiting Research Fellow at the York Management School, University of York where he leads research into next generation risk
management and accounting systems.
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, Russia, Pakistan, USA,
Jordan, Uganda, Tanzania, Rwanda, Ghana 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:
Risk management
Operations & IT
Data management
The course will be of equal interest to regulators and consultants who
advise financial firms. Teams from the same institution would find this
of particular relevance.
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Register Now:
Contact the marcus evans Training Division
Nick Cook, on:
+44 (0) 20 3 002 3151