Risk Data Aggregation & Reporting Solutions 2016

<p>Data loads are expanding rapidly in the financial services (FS) sector as regulations proliferate and&nbsp;more powerful analytical technologies come to market. This is driving a renewed focus on risk&nbsp;data aggregation and reporting (RDAR) solutions, as financial institutions (FIs) seek to collect and&nbsp;integrate trusted data more fully into their business. These days all data is risk data and FIs should&nbsp;treat it as such.</p>

<p>A non-siloed approach is necessary to allow regulators to access capital and collateral data more&nbsp;quickly and run stress test scenarios as required under Basel 3 and national regulations like the US&nbsp;Dodd-Frank Act. Business benefits also accrue for FIs that have good RDAR infrastructures. Better&nbsp;data is not just a compliance process, it delivers pricing, analytical and risk benefits.</p>

<p>The RDAR market is now worth $10.46bn according to Chartis’s separate ‘Global Risk IT&nbsp;Expenditure 2016’ report, which aggregates all of the firm’s 2015 research to derive a global risk&nbsp;IT spend figure and segment breakdowns for 2016 (Figure 1). $4.67bn of the global IT spend on&nbsp;RDAR is for new solutions (45%) v $5.79bn (55%) on maintenance. This is an unusually high figure&nbsp;for new IT spending; most FI technology expenditure customarily goes on ‘keeping the lights on’&nbsp;maintenance. It reflects the importance that FIs are placing on RDAR solutions and it is replicated&nbsp;across all Tiers.</p>

<p>This report looks at the reasons for investment, examining regulatory and technology drivers for&nbsp;RDAR, and available vendor solutions (see supply side analysis, page 37). Chartis gathered feedback&nbsp;from 104 institutions, involving 30 qualitative face-to-face interviews with FIs and 74 participants in&nbsp;the 2015 Chartis RDAR Systems Survey. The key findings show:</p>

<ul>
<li>Only a small minority (7%) of respondents have completely integrated their risk data&nbsp;aggregation and reporting into their enterprise data management (EDM) strategy or chief&nbsp;data officer (CDO) function (Figure 9). More encouragingly, 49% said “partially”.</li>
<li>Worryingly, only 21% rated unstructured Big Data management as “critical” (7%)&nbsp;or “important” (14%, Figure 13). Considering that 80% of all data in a typical FI is&nbsp;unstructured this research finding puts the spotlight on a major gap in most RDAR&nbsp;initiatives.</li>
<li>There is a delay in bringing RDAR and BCBS 239 programs to completion. 37.5% of all&nbsp;FIs predicted “2-3 years” to improve data granularity; 21% said “3-5 years”.</li>
</ul>

<p>The first two findings above suggest a disconnect between the chief risk officer (CRO) and the&nbsp;CDO. Risk and data strategy need to be more closely aligned, especially in the era of unstructured&nbsp;Big Data, but it appears that the vast majority of FIs are still grappling with “small data” integration&nbsp;challenges.</p>

<p><strong>BCBS 239 compliance deadline missed</strong><br />
The crucial regulatory driver on large FIs’ immediate horizon is the (BCBS) 239: Principles for&nbsp;Effective Risk Data Aggregation and Risk Reporting, which are part of Basel 3 and came into force for&nbsp;Global Systemically Important Banks (G-SIBs) on 1 January 2016. The 14 principles, covering data&nbsp;accuracy, timeliness and policy concepts such as governance, could provide an RDAR framework for&nbsp;the future, but none of the banks will meet the deadline.</p>

<p>Not one Tier 1 bank (aka G-SIB) surveyed over summer 2015 said they were “already&nbsp;compliant” with the over-arching principle 1, covering data governance, in BCBS 239.</p>

<p>Only 5% said they would be within 12 months – well past the 1 January 2016 deadline&nbsp;(Figure 5).&nbsp;It is obvious that there is no chance the BCBS 239 deadline will be met. Regulators need a reality&nbsp;check and better understanding of how long compliance will really take.</p>

<p>This report uses Chartis’s RiskTech Quadrant® in the supply side analysis to explain the structure of&nbsp;the market. The RiskTech Quadrant® uses a comprehensive methodology of in-depth independent&nbsp;research and a clear scoring system to explain which technology solutions meet an organization’s&nbsp;needs. The RiskTech Quadrant^® does not simply describe one technology option as the best RDAR&nbsp;solution; it has a sophisticated ranking methodology to explain which solutions would be best for&nbsp;specific buyers, depending on their implementation strategies. An example of the Chartis vendor&nbsp;evaluation form is included at the back of the report and a typical RDAR request for proposal (RFP)&nbsp;form from a Tier 1 FI, alongside the full survey results in the appendices.</p>

<p>This report covers the leading vendors offering RDAR solutions, including Asset Control, Axioma,&nbsp;AxiomSL, BearingPoint, BlackRock Solutions, Broadridge, Calypso, ClusterSeven, eFront,&nbsp;Empowered Systems, FICO, FINCAD, Fiserv, GoldenSource, Gresham, IBM, Intellect Design,&nbsp;Luxoft, Markit, Misys, Moody’s Analytics, MSCI, Murex, Numerix, Oracle, Prometeia, Quantifi,&nbsp;Quartet FS, SAP, SAS, SS&amp;C, SunGard, Wolters Kluwer FS and Xenomorph.</p>

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• Topics
• Vendor analysis
• Data Management
• Data Visualization
• Risk & Data Technologies
• Regulatory reporting
• Data management
• Big Data