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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

A bank's group structure changes through an acquisition. Under BCBS 239 Principle 2 (data architecture and IT infrastructure), what is the bank expected to do?

The bank should build and maintain data architecture and IT infrastructure that supports risk aggregation and reporting both in normal conditions and in stress or crisis. This includes integrating acquired entities. Postponing integration, using manual spreadsheets, or separate taxonomies undermines the principle.

  1. ADesign, build and maintain data architecture and IT infrastructure that fully supports risk data aggregation and reporting in both normal times and times of stress or crisisCorrect
  2. BPostpone integration of the acquired entity's risk data until the next regulatory review
  3. CRely on manual spreadsheets for the acquired entity because they are flexible
  4. DMaintain separate taxonomies for each legal entity to preserve autonomy

Explanation

Principle 2 requires data architecture and IT infrastructure supporting aggregation capabilities and reporting practices in normal times and during stress, including after mergers and acquisitions. Deferring integration, spreadsheets, and divergent taxonomies conflict with this.

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