The purpose of BCBS 239 is to ensure banks have the demonstrable liquidity to survive another credit crisis as we saw in 2008. It sets out criteria for identifying simple, transparent and comparable securitisations to prove the financial health of an organisation.
BCBS 239 and Metadata Management
Principle 2, article 33 of BCBS 239 states:
“A bank should establish integrated data taxonomies and architecture across the banking group, which includes information on the characteristics of the data (metadata), as well as use of single identifiers and/or unified naming conventions for data including legal entities, counterparties, customers and accounts.”
This directly implies that banks need to ensure that all data used in risk aggregation must be clearly and unambiguously defined and understood enterprise-wide so to enforce consistency and control to improve regulatory compliance. Metadata that is managed properly enables strong risk data aggregation capabilities, while a clearly defined and usable infrastructure allows banks to know that the data they are looking at is accurate and precise.
This level of understanding cannot be achieved without a fit-for-purpose metadata management process and data lineage solution.
BCBS 239 and Data Lineage
Data lineage is critical to an organisations ability to fulfil the intent of BCBS 239, the Bank of International Settlements (BIS) alludes to this as part of proper data risk aggregation and risk reporting:
“…High quality risk management reports rely on the existence of strong risk data aggregation capabilities, and sound infrastructure and governance ensures the information flow from one to the other.”
“…Risk management reports should be accurate and precise to ensure a bank’s board and senior management can rely with confidence on the aggregated information to make critical decisions about risk.”
These points highlight the importance of data lineage when it comes to a bank’s ability to track data. Data is created, manipulated and used, usually ending a report of some sort, traceability plays a vital role in assisting with data related decision making.
Visualised data lineage acts as the supporting documentation of risk reporting. It is a reference point where a bank will be able to prove the outcome of the report to both the regulator and senior management.
Solidatus for BCBS 239
Documenting a highly complex, large financial institution can be difficult. Until recently, data has been moving unfettered, with no controls, through organisations. Regulatory reporting data may originate from an inappropriate source, it may have undergone an unauthorised modification or simply be incorrect. This data needs to be understood to the relevant and correct granularity for it to be of value and in order to comply with legal obligations.
Solidatus gives financial institutions the ability to gain valuable insight into their data landscape through visualised data lineage, showcasing how data flows through their organisation, tracking from source to target and maintaining a temporal, historical record of change. Through its collaborative crowdsourcing model, Solidatus allows for quick and effective enterprise-wide sharing of knowledge identifying where data is held, its categorisation and who has access to it.
This visualisation enables an organisation to easily share their BCBS 239 data lineage in an interactive and dynamic format, allowing for greater transparency and control.
Solidatus’ metadata management allows the user to apply an unlimited number of properties to describe, categorise and control their data within a model as required by the business, satisfying the need for a “bank (to) establish integrated data taxonomies and architecture across the banking group, which includes information on the characteristics of the data”.