Risk framework & analytics: Basel IV and beyond

This panel discussion navigates the evolving landscape of regulatory risk and reporting, focusing on Basel IV, IRRBB, and Liquidity Risk.

Industry experts highlight the impact and benefits of the Basel IV implementation delays on global banks, the need for synchronization of regulatory timelines across jurisdictions, and the importance of granular data and automation in meeting new regulatory requirements. Additionally, the panelists delve into the significance of data granularity and standardization, the integration of supervisory and statistical reporting, and the future trends in risk management and regulatory compliance. 

Key takeaways from the panel include: 

• The delays in Basel IV implementation have created significant complexity for large global institutions, requiring them to maintain dual systems and methodologies for extended periods. However, these delays also provide additional time for institutions to prepare and align their systems. 
• Institutions that have focused on strengthening their market risk infrastructure have generally benefited more, emphasizing the need for robust core systems. 
• Synchronizing go-live dates for regulatory rules across jurisdictions is crucial for maintaining a level playing field in global markets, despite increasing IT implementation complexity. 
• The introduction of output floors as part of the CRR3 regulation poses additional challenges for banks, necessitating parallel calculations of standardized approaches and internal models. 
• The shift towards more granular data requirements necessitates significant changes in data collection and reporting processes, with a focus on automation and data quality to meet new regulatory standards effectively. 

“The Basel IV delays themselves create implementational dynamics and challenges for most institutions.”

Sid Dash, Chief Researcher, Chartis Research

" From a competitive standpoint, having staggered (Basel IV) go-live dates creates an uneven playing field in the markets, which is unhelpful. Although synchronizing the rules [...] it also increases the complexity of IT implementation because you need to run the old models for a year longer, at least."

Michael Genser, Treasury/Group Capital Management - Head of Group Solvency Management, Deutsche Bank

"If you look at data quality and BCBS 239, you need to ensure that data corrections are made right at the source in the future. If you do it afterwards [...] it will not suffice for more granular data reporting or when mixing statistical and prudential data."

Nils Gerstengarbe, Director, Commerzbank

"Where there is a challenge, there is always a chance for banks to improve and be much more automated."

Juergen Ferber, Head of Treasury and Risk Vertical – EMEA, FIS Capital Markets