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Regulators Collecting More Granular Data: Key Considerations for Regulated Entities

In an era where data is king, regulatory bodies like the Australian Prudential Regulation Authority (APRA) are increasingly focusing on the collection of more granular data. This shift represents both a challenge and an opportunity for regulated entities. Understanding and preparing for these changes is crucial. This article delves into the key considerations for regulated entities, anchored against the five pillars of regulatory reporting: People, Process, Governance and Control, Data, and Technology.



Pillars of regulatory reporting


People: The Core of Regulatory Reporting

The people involved in regulatory reporting are fundamental to its success. In a future where regulators move beyond traditional collection of reports; and focus on underlying data sets, the skill set required to perform regulatory reporting will continue to evolve. Key focus areas include:

  • Continuous Training: Staff must be regularly trained on new and existing regulations, ensuring a deep understanding of their implications on reporting. Regulatory reporting staff, traditionally certified accountants and risk managers, will require ongoing training to support them in their transition from reporting SMEs to data submission SME's.

  • Expertise in Data Management: As data requirements become more intricate, having specialists in data management and analysis is crucial. The ability to analyse large data sets, identify critical data elements, review data quality metrics, coordinate data remediation activities, document data definitions and glossaries will increasingly sit within the regulatory reporting team's remit.

  • Cross-functional Teams: Encourage collaboration between departments such as IT, compliance, and finance to foster a more holistic approach to regulatory reporting. With data ownership and governance becoming more embedded in industry, regulatory reporting no longer is the exclusive domain of finance and risk teams. Adhering to regulatory reporting standards and obligations is a whole-of-enterprise responsibility; and regulatory reporting teams are increasingly taking a coordination role in a decentralised operating model.

  • Retention Strategies: Implement strategies to retain key personnel with regulatory and data expertise. Focus on maximising the value-adding analysis and insights the regulatory reporting teams to uplift governance and controls; whilst minimising mundane tasks through automation increases job satisfaction and retention.

  • Leadership and Culture: Cultivate a culture of compliance and awareness at all levels, led by proactive leadership. Tone from the top is a critical ingredient to a high-functioning regulatory reporting function. Accountable executives and risk and audit committees drive the expectations on governance and controls throughout the organisation.

Process: Streamlining for Efficiency

Processes are the backbone of consistent and high-quality regulatory reporting. They must be both robust and flexible, repeatable and sustainable:

  • Adaptability: Develop processes that are adaptable to regulatory changes with minimal disruption. Ensure flexible enabling technology supports corporate agility. The regulatory reporting environment has been subject to continuous change - and with developing areas such as ESG, Climate Risk, ongoing Basel updates and new asset classes such as virtual assets there is no shortage of new datasets entities can expect regulators to show a keen interest in. Regulatory reporting is not a "set and forget".

  • Automation: Invest in automation technologies to improve accuracy and efficiency in reporting. Remove key-person dependency and operational risk. To swiftly process increasingly large data sets for regulatory reporting, modern data solutions that are architected for the large data landscape are essential for managing complex data ecosystems and facilitating rapid, accurate data analysis. These solutions enable real-time processing and analysis of vast data volumes, ensuring that regulated entities can keep pace with the dynamic regulatory environment.

  • Process Mapping: Regularly map and review reporting processes to identify bottlenecks and areas for improvement. Ensure up-to-date process maps, including key controls are available for all reporting processes. BPMN's combination of standardisation, versatility, and integration capabilities makes it a powerful tool for organisations looking to document, analyse, and improve their business processes.

  • Documented Procedures: Maintain well-documented standard operating procedures for consistency and training purposes and to reduce key-person risk. Embed documentation within the systems of record to ensure documentation is kept up-to-date and becomes a key component of the corporate knowledge base.

Governance and Control: Ensuring Compliance

Strong governance and control mechanisms are essential for compliance. In a scenario where regulators receive granular data, key controls that work well on aggregated reports will no longer be fit for purpose. Entities will need to review and adapt their governance framework to achieve the same outcomes of high-quality regulatory submissions that meet regulatory requirements:

  • Robust Frameworks: Implement and maintain robust governance frameworks to guide regulatory reporting practices. Align reporting with enterprise data governance. Identify roles and responsibilities across the data and reporting lifecycle. Build out a RACI for all reporting obligations - taking a holistic view from data capture through to regulatory submission.

  • Risk Management: Integrate risk management strategies into the reporting process. Identify risks and controls, and leverage operational risk management practices into the fabric of regulatory reporting. Address data risks by identifying controls across the data lifecycle ensuring key dimensions of data quality such as data accuracy, validity, timeliness, completeness, integrity.

  • Escalation process: Develop a plan to address issues or exceptions. In a future of granular reporting - the tradition of report adjustments to handle exceptions such as late data delivery/data quality issues will be no longer be an option. Timely resolution of exceptions or data quality remediations will be critical to meet deadlines and ensure accuracy.

  • Traceability Matrix: Establish a traceability matrix to map and cross-reference regulatory requirements with internal controls and processes. This ensures complete coverage of regulatory obligations and facilitates efficient management of interpretations/business rules, use of proxies, and periodic review and attestation.

  • Regular Audits: Conduct comprehensive internal audits to ensure adherence to policies and regulations. Regulators expect regulatory reporting to be the product of systems, processes and controls that have been reviewed and tested by the external auditor.

Data: The Foundation of Reporting

In the realm of granular data requirements, the management and quality of data are paramount. Enterprise data capabilities need to blend in with regulatory reporting specific requirements:

  • Data Quality: Prioritise accuracy, completeness, and timeliness in data collection and reporting. Establish metrics to regularly assess data quality and implement corrective measures as needed.

  • Data Integration: Efficiently integrate data from disparate sources for cohesive reporting. Utilise modern integration tools that support various data formats and sources, ensuring a seamless flow of information.

  • Data Governance: Establish strong data governance frameworks to ensure data integrity and security. This includes defining clear policies for data usage, storage, and sharing, as well as assigning responsibilities for data management.

  • Data Accessibility: Ensure that data is easily accessible to authorized personnel for reporting purposes. Implement user-friendly data platforms that provide access to data while maintaining security protocols.

  • Advanced Analytics: Utilise advanced analytics and business intelligence tools to glean insights and enhance the quality of reports. Leverage predictive analytics to anticipate future trends and regulatory requirements.

  • Metadata Management: Develop robust metadata management practices to improve data discoverability and understanding. This involves maintaining detailed documentation about data sources, definitions, and lineage.

Technology: The Enabler of Efficient Reporting

The right technology solutions are critical in enabling efficient and accurate regulatory reporting. When regulatory disclosure requirements evolve from reports to data sets - tactical solutions will not only not meet regulatory expectations; they will simply not be able to handle the volume of data submitted. Entities should invest in the right enabling technology to meet internal and external expectations:

  • RegTech Solutions: Advanced RegTech solutions like Reg360 streamline the reporting processes, balancing all pillars of regulatory reporting: empower people, automate processes, embed governance and controls, align data strategy, leverage modern technology on Cloud.

  • Scalability: Choose technology solutions capable of scaling to handle increasing data volumes and complexity. Avoid traditional monolithic vendor solutions with a heavy footprint and bespoke data model. Ensure a future-proof architecture that will scale with the organisations evolving data strategy.

  • Alignment with Enterprise Data Strategy: Align your regulatory reporting technology with the enterprise data strategy. Leverage enterprise capabilities across internal data assets - while leveraging the regulatory reporting application for regulatory reporting specific requirements.

  • Integration with Existing Systems: Ensure new technologies have the capability to integrate seamlessly with existing systems. The age of complex ETL and fixed vendor data models are long behind us - and modern regulatory data pipeline patterns leverage data "as is" from source or the enterprise data hub (raw or conformed). Enrich data at the point of mapping against regulatory definitions ("ELT") through taxonomies to maintain transparency and data lineage.

  • Continuous Upgrades: Stay abreast of technological advancements and upgrade systems in a continuous deployment cycle (CI/CD). SaaS solutions can leverage the scale of trusted solution providers across the industry.

  • Cloud Computing: Leverage cloud computing solutions for enhanced scalability, security, and efficiency. Cloud-based platforms offer the flexibility to manage large data sets and complex computations required for regulatory reporting.


Conclusion

Navigating the complexities of regulatory reporting in the age of granular data collection requires a comprehensive approach, balancing people, processes, governance and control, data, and technology. By focusing on these five pillars, entities can effectively prepare for and adapt to the evolving regulatory landscape.


There are many challenges that will arise during this transition. Many organisations grapple with legacy source systems, a complex data landscape and the need to invest in risk management uplifts with cost-pressures in a volatile economic environment. However, this transition also creates a unique opportunity to break down internal barriers and organisational silos; and deliver strategically on both the enterprise and the regulator's data strategy.


At Reg360, we are committed to supporting regulated entities through this journey with our cutting-edge solutions. For a demonstration of how Reg360 can transform your regulatory reporting process, contact us today.


Reg360 is the world’s only regulatory reporting solution that is designed from the ground up for the age of big data and cloud computing. Reg360 is disrupting the regulatory reporting landscape with a solution that meets both the business and technology requirements of the modern data-driven enterprise.


Join the (r)evolution. Book a demo here.

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