White Papers for Basel II Capital Accord (Basel II)

Getting to Grips with the Data Management Challenges for Basel II Readiness

NET REPORT

Data management is key to the biggest challenges facing the financial services industry today, more specifically
the need to improve risk and regulatory management processes and systems. Following a period of hesitancy,
banks are coming to grips with the broad implications of the Basel II Accord. What was a "wait-and-see" attitude
has given way to the realization that Basel II readiness must become a priority. Unlike Y2K, this will not be a onceand-
done effort, compliance is an ongoing process. Basel II implementation at the largest banks is exposing
significant issues with regards to the risk infrastructure, including policy, processes, systems and data
management. Most organizations are managing to come to grips with their policy, process and systems
requirements, however data management still remains a significant road block. Complying with Basel II requires a
significant history of consistent, accurate and granular data within the information systems. What needs to be
realized is that if the challenges are faced up to, and banks and other financial services resource their Basel II
projects properly in terms of money, time and people, there will be significant benefits beyond the ability to
demonstrate compliance.
Before dissecting the challenges and benefits presented by Basel II, it is important to understand the drivers
behind this regulatory regime and how regulators and practitioners are expected to interpret it. In a world of
increasingly complex interconnected financial systems, recent operational risk failures, such as the concealed
trading losses at Enron, have highlighted the dangers of poor risk management. At the same time, international
regulatory organizations are increasingly seeking to regulate the banking and financial services industry. The two
drivers of risk and regulation are provoking a serious review of existing IT systems. This article introduces Basel II,
compares the current compliance timelines on the International scene, lays out the challenges and presents an
initial roadmap to help banks get started with the process along with the ways banks can profit from investing in
Basel II compliance.

View the White Paper

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