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Getting the data for Basel and Solvency

posted Feb 8, 2015, 7:34 AM by Unknown user   [ updated Feb 22, 2015, 8:13 AM ]
Now (Q1 2015 in Europe) the regulations become more and more clear the banks and insurers face a new challenge. Their reporting lines begin to work and even produce the mandatory XBRL reports... with test data! And even then it is disquieting to see how many manual additions and corrections are needed in the process. The back traceability of reported data is really challenged here! But the real question is, why is this the current situation?
The answer is pretty simple, they don't have the data, at least not on the level of detail and as far back in time as the regulators are asking.
The cause is the same as of why EBA and EIOPA started the regulatory reporting programs in the first place. The focus of banks and insurers was diverted to earning as much money as possible in stead of adding the best value for their clients. So they disregarded risk and compliance a little bit and kept only the data they needed to get the revenue, and threw away the rest.
So early on they were knowing their business, but they lost that to greater revenue. And because of competition they all did. Then a few overstepped it and everone startled, including the national governments and, not to be forgotten, the local and global economies.
Because also in the past decade most paper based administrations of banks and insurers were digitalized much data has become digitally available to automated administration systems. And that's all right. The only thing is... much of the data that is now newly requested stayed in the digitalized documents, in a non retrievable way without very costly efforts. And of course there is data that is now very popular that was used in decision making but never ended in any documents or systems. To date all this data is or will be carefully registered. That's good news. But for today's reports the data will be missing and subject matter experts will be manually filling the gaps.
So there it is. We figure out a way to fill the reports, then produce the reports, ask ourselves and regulator representatives if it is good enough, and with the answer start the next cycle of report filling.