Featured Product

    BNM Publishes Guidance on Reporting of Operational Risk Data

    February 26, 2021

    BNM published a policy document that provides comprehensive guidance on reporting governance, reporting procedures, mandatory data items, and reporting taxonomies of operational risk submission with regard to loss events, key risk indicators, and scenario analysis. To help users ensure quality submission, BNM also published a set of frequently asked questions (FAQs) and a user guide that contains the technical specifications for application accessibility and system functionality navigation. The policy document is applicable to certain financial institutions that include licensed banks, investment banks, Islamic banks, and international Islamic banks, with an effective date of March 01, 2021.

    The guidance stipulates that the reporting entities must prepare and submit information on loss event data, key risk indicators, and scenario analysis to BNM through the Operational Risk Integrated Online Network (ORION). The guidance sets out the reportable operational risk events and explains their classification and the reporting timelines. The reportable events include robbery and theft, cyber threat, reputational impact events, operational risk events equal to or more than MYR 1 million, customer information breaches, actual and potential Shariah Non-Compliance events, credit and debit card frauds, overseas loss events, physical cash shortages, and actual loss equaling or exceeding MYR 1,000. The reporting data must include the operational risk events of foreign and offshore subsidiaries or branches of the reporting entities that resulted in financial-related losses. The recent revisions to the policy and the FAQs are intended to:

    • Provide clarity on the reporting of Shariah non-compliance events
    • Realign cyber-risk-related definitions and terminologies with the FSB cyber lexicon
    • Enhance the granularity of reporting requirements to improve the accuracy of operational risk reporting

    The guidance specifies that the reporting entities must put in place appropriate internal governance and processes to ensure completeness, accuracy, and timeliness of the data and information submission to BNM, including processes for consolidation, validation, and reconciliation of such data and information with the internal database, system, and financial accounts of the reporting entities. Financial institutions must submit information on the key risk indicators according to the applicability, description, and frequency set out in the key risk indicators taxonomy (refer to Appendix 15). Additionally, financial institutions must conduct scenario analysis as and when BNM requires and submit the results of the scenario analysis and other information to BNM, through ORION, within the prescribed time. Scenario analysis is a forward-looking tool that examines and explores predominantly emerging risks and rare tail-end events, which are usually low-frequency, high-impact events. This policy document supersedes the policy document on "Operational Risk Reporting Requirement – ORION" that was issued on June 22, 2018.

     

    Related Links

    Effective Date: March 01, 2021

    Keywords: Asia Pacific, Malaysia, Banking, Insurance, Operational Risk, ORION, Reporting, Islamic Banking, FAQ, BNM

    Featured Experts
    Related Articles
    News

    PRA and FPC Finalize Changes to Leverage Ratio Framework in UK

    The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA

    October 08, 2021 WebPage Regulatory News
    News

    CFPB Proposes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.

    October 08, 2021 WebPage Regulatory News
    News

    PRA Decides to Maintain O-SII Buffers for Another Year

    The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.

    October 08, 2021 WebPage Regulatory News
    News

    FSB Report Assesses Implementation of Recommendations on Stablecoins

    The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.

    October 07, 2021 WebPage Regulatory News
    News

    APRA Updates Loan Serviceability Expectations for Home Lending

    In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

    October 06, 2021 WebPage Regulatory News
    News

    CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.

    October 06, 2021 WebPage Regulatory News
    News

    EBA and EIOPA Set Out Work Priorities for 2022

    The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.

    October 05, 2021 WebPage Regulatory News
    News

    MFSA Issues Reporting Updates and Guidance for Banks

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.

    October 05, 2021 WebPage Regulatory News
    News

    EC Publishes Decision on List of Equivalent Third Countries Under CRR

    The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).

    October 04, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write-Down and Conversion Powers

    EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.

    October 04, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7552