The Basel Committee has finalized risk-aggregation and reporting principles specific to boards, senior management, management information systems and supervisors. These build on a proposal issued last summer and go farther than general standards addressed in other Basel standards. They may require significant changes in information technology (IT) at most large financial-services firms and pose a challenge to integrated cross-border operations where complexity and/or dataflow barriers impede corporate-wide aggregation and standardization. The principles include new requirements for boards and senior management, reflecting the risk regulators fear when firms do not know the full scope of their exposures and supervisors lack early warning. Although a detailed and technical document, the principles include serious sanctions – e.g., capital add-ons and activity limitations – for lapses.

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