Comprehensive Capital Analysis and Review (CCAR) is a regulatory framework introduced by the Federal Reserve in order to assess, regulate, and supervise large banks and financial institutions – collectively referred to in the framework as Bank Holding Companies (BHCs). – (WikiPedia) Dodd-Frank Act stress testing (DFAST)-an exercise similar to CCAR- is a forward-looking stress test conducted by the Federal Reserve for smaller financial institutions. It is supervised by the Federal Reserve to help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic conditions. Under the current executive order affecting Dodd-Frank, BHCs would continue to be subject to quantitative review portion of the CCAR and the requirements for Dodd-Frank Act stress testing. – (Deloitte – Banking Regulatory Outlook 2017) This article focuses on the objective to address the challenges of CCAR through an open-source Business Friendly platform for Big Data Analytics.
Every year, an increasing number of Tier 2 banks come under the CCAR mandate. CCAR basically requires specific BHCs to develop a set of internal macroeconomic scenarios or use those developed by the regulators. Regulators also develop their own systemic stress tests to verify if a given BHC can withstand negative economic scenarios and continue to operate their lending operations.
As part of CCAR reporting guidelines, the BHC’s have to explicitly call out
A Vision for an Open Architecture
An open and scalable architecture can help address above mentioned challenges cost effectively with an analytical setup customized for periodic analysis and automating the operationalization of modeling process held under close watch of regulators.
Need for open architecture is better understood when considering the variety of technology and business units within BHCs in the figure below.
Following set of technology implications have to be considered in order for all business and technology units to align with CCAR requirements.
A Reference Architecture for CCAR..
Understanding these implications, we recommend an architecture that helps build capabilities around data assimilation, storage and compute capabilities along with ability to address the need for data taxonomy across BHCs’ affected divisions.
Operationally, this architecture will enable Administrators and CCAR stewards to define, annotate, and automate the capture of relationships between CCAR variables and underlying elements including source, targets and model derivation process.
Strategically, an open architecture allows BHCs to regain focus on day-to-day business critical operations impacting their bottom line and continuing to innovate around customers and products.
Addressing regulations like CCAR & DFAST through technology is not just about meeting quantitative requirements but also about adopting sound risk-management practices that require a holistic approach across the value chain (model development, data sourcing, reporting) across Risk, Finance and Treasury functions. A good risk-management practice should happen regardless of the prodding from regulators. Doing this can only ensure that the metrics and outputs of capital adequacy can be produced accurately and in a timely manner, thus satisfying the regulatory mandate.
 Federal Reserve CCAR Summary Instructions 2016
 Deloitte – Banking Regulatory Outlook 2017