On 3 May 2024, the European Central Bank (ECB) published a final guide on effective risk data aggregation and risk reporting. The ECB has also published a feedback statement on its earlier consultation on the guide.

The final guide outlines prerequisites for effective risk data aggregation and risk reporting to assist banks in strengthening their capabilities, building on good practices observed in the industry. It explains in detail how the ECB applies relevant national laws, transposing the Capital Requirements Directive in line with relevant European Banking Authority guidelines.

The ECB strongly recommends that significant institutions make substantial progress in improving their data aggregation capabilities and internal risk reporting practices and in the final guide it has identified seven key areas of concern. These seven areas are considered important prerequisites for robust governance arrangements and effective processes for identifying, monitoring and reporting risks. They are intended to be addressed within a reasonably short time frame, if not properly addressed already.

The seven areas are:

  • The responsibility of a bank’s management body.
  • The scope of application of the data governance framework.
  • Key roles and responsibilities for data governance.
  • The implementation of a group-wide integrated data architecture.
  • The effectiveness of data quality controls.
  • The timeliness of internal risk reporting.
  • Implementation programs.

The ECB expects institutions to consider the final guide in conjunction with the Basel Committee on Banking Supervision’s principles for effective risk data aggregation and risk reporting.

The ECB expects institutions to assess whether their data governance framework complies with the applicable legal framework, aligning with the contents of the final guide and taking any action that may be necessary.

The ECB intends to follow up on the expectations set out in the final guide in its supervisory activities on a case-by-case basis, in line with the principle on proportionality.