–Progress Needed on IT Infrastructure and Risk Management

NEW YORK (MNI) – The following was issued by the New York Federal
Reserve Bank Thursday:

Senior financial supervisors from 10 countries — collectively, the
Senior Supervisors Group (SSG) — today issued a report that evaluates
how financial institutions have progressed in developing formal risk
appetite frameworks and in building out highly developed IT
infrastructures and firm wide data aggregation capabilities.

The reportObservations on Developments in Risk Appetite Frameworks
and IT Infrastructuresconcludes that while firms have made progress in
developing risk appetite frameworks and have begun multiyear projects to
improve IT infrastructure, considerably more work must be done to
strengthen these practices. In particular, the aggregation of risk data
remains a challenge, despite its criticality to strategic planning,
decision making and risk management.

The observations and conclusions in the report reflect the findings
of initiatives undertaken by two SSG working groups. The risk appetite
working group conducted a series of interviews with boards of directors
and senior management of global financial institutions to gauge progress
in risk appetite frameworks, while the working group that focused on IT
infrastructure based its views on observations from a number of existing
supervisory efforts.

This report represents a joint effort on the part of 12 supervisory
agencies: the Canadian Office of the Superintendent of Financial
Institutions, the French Prudential Control Authority, the German
Federal Financial Supervisory Authority, the Bank of Italy, the Japanese
Financial Services Agency, the Netherlands Bank, the Bank of Spain, the
Swiss Financial Market Supervisory Authority, the U.K. Financial
Services Authority, and, in the United States, the Office of the
Comptroller of the Currency, the Securities and Exchange Commission and
the Federal Reserve.

These initiatives were conducted to support the priorities of the
Financial Stability Board, whose mission is to address vulnerabilities
in the financial system and to promote global financial stability.

(Entire Report Available on newyorkfed.org)

[TOPICS: M$$DR$,M$U$$$,MMUFE$,MGU$$$,MFU$$$]