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The pressure is not off despite extended timelines for CRR3 and FRTB capitalisation

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The final EU Basel III implementation and CRD6/CRR3 requirements include “Basel IV” finalisation and expanded supervision. Uncertain negotiation periods and more complex requirements create challenges for firms as they prepare for EU Basel IV framework adoption.

Bricks have been laid but…

Having quickly met initial CRR2 deadlines, organizations recognize they must now critically examine current processes and build comprehensive, optimized strategies. The delay has triggered a higher expectation, especially regarding consistency, and will attract more regulatory scrutiny. To be ready, firms must fortify their risk calculation and management capabilities and inevitably reach for the cloud. They must demonstrate significant improvement in the sophistication and completeness of their risk frameworks.

As legislation may evolve and the final CRD6/CRR3 could look different from what is currently expected, firms must also pay close attention to areas most susceptible to change.

Rome was not built in a day

Organizations should review their current business models as well as operational and risk frameworks now to proactively implement future processes that incorporate harmonized risks and expanded capital requirements. Global firms must consider differences between CRR3 and Basel adoption in other jurisdictions, including the US.

Black-box, non-flexible solutions will not support seamless global implementation.

The new and expanded Basel IV risk framework is based on sensitivities, interconnectivity, and comparability across sectors. Now is the perfect time to create optimization strategies, implement technology-driven processes, and create scalable, data-driven risk management in a SaaS- environment that will enable enterprise-wide efficiencies.

All of this will lay the foundation for strong risk calculation and management and put firms well on their way to building a future-proofed approach as solid as Rome itself.

To discuss building for the future and preparing for CRR3 requirements, contact us.

You may also be interested in our perspective on collateral and risk integration in the context of Basel framework adoption and interdependent regulations, read more here.


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