8 health check areas for regulatory reporting functions
The target operating model
As reporting functions play a more significant role in meeting the regulatory obligations of financial institutions the challenges they face are becoming increasingly apparent and having wider implications, particularly from a risk perspective. Traditional regulatory reporting operating models have not evolved at the same pace as the regulatory environment and require investment and targeted development to adequately support the business.
Furthermore, the Central Bank of Ireland is enhancing supervisory engagement and the Single Supervisory Mechanism is putting ‘data and reporting capabilities’ at the centre of their enforcement priorities , meaning that the operational and reputational risks associated with having legacy operating models will continue to increase.
Regulatory reporting has rarely been a focus area within institutions and the increased regulatory reporting burden since the global financial crisis has mostly been addressed by short-term tactical solutions. Institutions navigating the financial crisis typically have not had the resources or the systematic capabilities to build flexible, scalable operating models that could adapt to the upcoming surge of reporting requirements and thematic inspections while those that did were reluctant to invest in the changeable environment. Aside from systematic and resource limitations, reporting functions may not have had the support of governance structures that would allow the function to meet the increasingly demanding short and long-term expectations. For regulatory reporting functions that should be progressing their operating models there are a number of key areas that require focus.
There is no doubt that addressing these challenges is a difficult task for institutions and in some cases requires significant investment and senior management buy-in. However, there is also no doubt as to increasing levels of risk associated with not fulling heightened regulatory expectations with regard to data aggregation and regulatory reporting.
For more information on the regulatory reporting target operating model or for any prudential regulation questions including tailored assessments, please contact the Deloitte Ireland Prudential Regulation Team.
How Deloitte can Help?
Deloitte operate within the EMEA Regulatory network and have specifically developed tools and methodologies based on EMEA best practice that can help to address the challenges outlined in this article.