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XBRL: the future of financial transparency

Cliff Saran

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.


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