Description

Banks that adopt the IRB approach to determine regulatory capital rely on their internal systems for assessment of credit risk. In order to produce reliable risk estimates, these IRB systems are subject to strict validation and data management practices. The two most significant of these practices are data maintenance and control and oversight. Effective IRB data maintenance encompasses sufficient checks and balances during collection, storage, retrieval, and analysis of essential data for obligors and facilities throughout the entire data life cycle. A control and oversight mechanism ensures that the various components of the IRB system are functioning properly.
This course introduces various aspects of data maintenance, control, and oversight mechanisms for IRB systems. It illustrates the life cycle tracking for data and discusses the role of data in the IRB system. The course also outlines various Basel guidelines for ensuring data quality and integrity, and independence, transparency, reviews, audits, and corporate oversight of IRB systems.