Data is becoming a much greater asset than ever, and companies are using much more sophisticated data analytics to drive their daily business decisions. Due to this increased sophistication and a lack of transparency into how the data is being used, the U.S. government has started to regulate industries such as banks and financial institutions under the Basel Committee on Banking Supervision (BCBS 239), Dodd-Frank Act Stress Testing (DFAST), and Comprehensive Capital Analysis and Review (CCAR) regimes. These regulations ensure that financial institutions possess enough capital to survive a crashing market, stabilize, and prevent a severe depression such as the financial crisis of 2008.
What Is BCBS 239?
BCBS 239 is a regulation set forth by the Basel Committee on Banking Supervision to effectively measure banks’ performance. Banks must develop key risk modeling metrics, including advanced measurement approaches for operational risks. BCBS 239 aims to enhance data infrastructure to improve decision-making processes and timeliness. Ultimately, it reduces the probability of loss and requires banks to strategically plan new products.