Unified risk management data mart solutions

Scheme background

China Banking Regulatory Commission issued Measures for the Capital Management of Commercial Banks (Trial) on June 7, 2012 and implemented since January 1, 2013, which established more specific standards and norms for commercial banks to implement the new capital agreement. The establishment of comprehensive risk management data mart is one of the necessary prerequisites for implementing the compliance standards of the new agreement. By following New Capital Accord issued by Basel Committee as well as the requirements of China Banking Regulatory Commission on credit risk, market risk and operational risk management guidelines, the comprehensive risk management data mart will comprehensively plan the risk data model targeting to requirements of data for implementing comprehensive risk management and new capital agreement compliance, and build supporting infrastructure, including data quality improvement, data standards, data governance, data architecture, and data quality monitoring.

Scheme content

By following New Capital Accord issued by Basel Committee as well as the requirements of China Banking Regulatory Commission on credit risk, market risk and operational risk management guidelines, the comprehensive risk management data mart will comprehensively plan the risk data model targeting to requirements of data for implementing comprehensive risk management and new capital agreement compliance, and build supporting infrastructure, including data quality improvement, data standards, data governance, data architecture, and data quality monitoring. 1. Based on new protocol guidelines and risk application calculation requirements, develop the definition, classification and information model for risk subjects, establish the standard and definition for risk subject data and the implementation in the risk management data mart, to ensure the consistency of data and business definitions; 2. Construct a complete fundamental data model covering credit risk, market risk and operational risk, which needs to adapt to changes in future business development, operating environment, external regulation and rules related to new capital agreements, and comply with the compliance requirements of new capital agreement and the requirements in relevant CBRC guidelines; 3. Realize the calculation and sharing of risk data and application index to provide data support for risk management application; 4. The data control technology is used to conduct the quality monitoring and evaluation of basic data, the requirements of risk measurement application projects are followed to implement the data quality inspection logic of fundamental data, which should meet the compliance requirements of the new agreement regulatory guidelines. Risk management data mart needs to collect all kinds of risk data and face many risk applications at the same time, so it is difficult to satisfy all kinds of requirements by using a single storage structure, and then the idea of stratification grows. The biggest characteristics of data design in the risk management data mart: complete - support the overall risk management system, specialized - subject domains are divided to highlight the risk business drive, accurate – emphasize the data accuracy, consistency and coherence, economic - business oriented, to arrange the storage mode reasonably (physical table and view)

Scheme value

1. The establishment of risk management data mart can unify the risk data source and business specification, which then can effectively prevent the inconsistency of calculation results caused by the difference of data sources or statistical rules among different systems, making the data produced from various applications more authentic and reliable, and making the data verification condition between systems better; moreover, it considers the measurement and allocation of regulatory capital and economic capital in the whole bank, achieving the comparability between regulatory capital and economic capital, which greatly enhances the effectiveness of credit risk management of the whole bank. 

2. With the construction of risk management data mart, it is also possible to build the whole banks’ collateral management system and internal rating & monitoring system. The establishment of the collateral management system can solve the problems such as information asymmetry and thereby provide data support for the bank to improve the collateral management level. The internal rating & monitoring system examines and monitors the rating system based on the statistical debt and relevant data at the client level, and subsequently improve the internal rating system to further perfect the banks’ risk management system. 

3. By establishing a scientific and effective risk data management framework, the risk management data mart takes the application of risk data as the banks’ strategic assets for management to ensure the consistency, integrity and effectiveness of risk data. The establishment of risk data mart improves the usage process of risk data, unifies the risk data specification, and enhances the value creation ability of data and promotes the core competitiveness of banks in the industry while meeting the needs of risk management. 

4. CBRC has put forward requirements for banks’ basic risk data from different perspectives, and data management will improve the banks’ ability of basic risk data government, help banks to achieve comprehensive and integrated government of basic risk data, and promote the banks’ fine management. Therefore, risk data management is an important and necessary work performed by banks, no matter from the perspective of strengthening the internal control mechanism construction or from the banking planning and supervision.