BDO Addresses Data Governance and Quality for Financial Institutions

The European Central Bank (ECB) has established new minimum supervisory expectations for financial institutions regarding risk data aggregation and data quality management with its Guide on effective risk data aggregation and risk reporting (RDARR), finalized in June 2026. This guidance enhances regulatory focus on banks' capabilities in these areas, a priority for both the ECB and national regulators like the Bundesbank.

The RDARR Guide operationalizes principles from the Basel Committee on Banking Supervision (BCBS 239), introducing a harmonized framework for data governance, integrated data architectures, and quantifiable data quality metrics. It aims to improve the accuracy, completeness, timeliness, and adaptability of risk information. Many banks have faced challenges implementing BCBS 239 due to legacy systems and fragmented data structures, prompting the ECB to clarify expectations and reinforce accountability through senior management oversight.

The ECB's framework highlights four key data quality dimensions: Accuracy, Integrity, Completeness, and Timeliness. Additional dimensions like consistency, uniqueness, validity, and traceability are also important throughout the data lifecycle. Measuring and reporting data quality is complex. BDO's Professor Andreas Igl has authored the 'Handbuch Datenqualität' (Data Quality Handbook) to guide practitioners in measuring these dimensions and aggregating them into a cohesive Feature Reliability Score (FRS).

BDO offers advisory services to assist financial institutions in implementing or improving their data governance frameworks. Services include identifying key risk indicators and critical data elements, defining roles and responsibilities within a data governance structure, and documenting data architecture and lineage. The firm emphasizes the need to measure data quality to create transparency on weaknesses and actively support risk management practices, particularly in the context of AI reliance on high-quality data.