Bringing your data threads together
FRTB comes into effect at the beginning of 2023 and well before that firms need to make sure their data management can address its requirements. This poses a real challenge as most organizations lack scalable infrastructure to handle increased volumes of historical data for proxy measurement and modellability assessments. A failure to meet the required data volumes will directly impact data lineage and reporting accuracy. FRTB puts a much higher penalty on incomplete, inaccurate and inconsistent data. Worst case, a single gap in auditable observed trades in any single risk factor over a 10-year period could cause a multiple expansion in capital.
At the very core of risk management and regulatory compliance, in financial services, is the joining together of data from a huge range of different information silos, departments, product lines, customers and risk categories. Risk and finance sit at the end of the chain, tying many threads together, uncovering issues and spotting patterns. This is where many organisations can run into difficulty, unable to resolve what represents a mammoth data integration task and lacking transparency on the data sourcing process.