IBM is planning to work with banks and financial institutions,
corporations, software companies and regulators to create a
standards-based approach to risk reporting.
The
IBM Data Governance Council is exploring the use of
Extensible Business Reporting Language (XBRL), a software
language for describing business terms in financial reports.
Members of the council include American Express, Bank of
America, Citibank, Deutsche Bank, Discover Financial, MasterCard,
Nordea Bank, Wachovia, and the World Bank,
IBM said XBRL could be used to provide a non-proprietary way of
reporting risk that could potentially be applied worldwide.
According to IBM, XMBL is already widely used for financial
reporting throughout Europe, Australia and Japan. The widespread
use of this standard ensures adequate skills and understanding
among firms and regulators.
Steve Adler, chairman of the IBM Data Governance Council, said,
"Creating a risk taxonomy using XBRL will provide a vocabulary and
a common language allowing everyone to understand what risk means,
and that is the first step in making it easier to calculate and
report."
IBM believes an XBRL taxonomy of risk could serve as a
fundamental building block to enable interoperability and standard
practices in measuring risk worldwide. Such standards could
potentially enable central banks to manage vast databases of loss
history and trend analyses that could better inform policy makers
and member banks helping to minimise risk and produce better
returns.
The council is planning to discuss this specification between 26
and 27 February 2009 in New York City. The Financial Services
Technology Consortium, XBRL International, XBRL US, and US
Securities and Exchange Commission staff are expected to
attend.
The IBM Data Governance Council is a group of 50 global
companies, including Abbott Labs, among others, that have pioneered
best practices around risk assessment and data governance to help
the business world take a more disciplined approach to how
companies handle data.