ECB: Sound Risk Data Reporting - Key to Better Decision-Making and Resilience

?ECB emphasizes the critical importance of robust risk data aggregation and risk reporting (RDARR) capabilities for banks to ensure sound decision-making, effective risk management, and overall resilience.

?Challenges and Supervisory Findings. Despite the benefits, the ECB observed long-standing deficiencies in RDARR implementation due to: Weak governance frameworks and management oversight; Fragmented IT systems reliant on manual aggregation processes; Data quality issues, including weak controls and inconsistent reporting; Slow progress in addressing deficiencies despite regulatory expectations.

?ECB’s Supervisory Initiatives. To address these issues, the ECB launched a targeted supervisory strategy in 2022, with the following measures: On-Site Inspection Campaign (2022-2024) - A three-year assessment of one-third of supervised banks to identify RDARR weaknesses;

ECB Guide on RDARR (2024) - A benchmark document outlining supervisory expectations to drive improvements in banks’ risk data governance;? Targeted Reviews (2024) - Assessments revealing persistent gaps in RDARR compliance and implementation; Management Report on Data Governance & Quality (2024) - An annual self-assessment exercise for banks, feeding into Supervisory Review and Evaluation Process (SREP) scores.

?Next Steps & Enforcement Measures. The ECB will continue enforcing RDARR improvements through: Clear escalation processes with defined remediation deadlines; Supervisory measures under Article 16 of the SSM Regulation, including penalty payments if banks fail to comply; Regular tracking of progress to ensure compliance with regulatory expectations.

Original source: https://www.bankingsupervision.europa.eu/press/supervisory-newsletters/newsletter/2025/html/ssm.nl250219_2.en.html?utm_source=basu_newsletter&utm_medium=email&utm_campaign=basu_newsletter_February_2025&utm_term=article_outsourcingtrends&utm_content=title&utm_source=basu_newsletter&utm_medium=email&utm_campaign=basu_newsletter_February_2025&utm_term=article_outsourcingtrends&utm_content=title