FSI Brief Studies Operational Resilience Initiatives Amid COVID Crisis
FSI published a brief that examines the operational resilience initiatives of financial-sector authorities, in response to the COVID-19 outbreak. The brief focuses on examples of business continuity guidance issued by authorities in response to COVID-19, including updates to the existing guidance and the incorporation of pandemic scenarios into testing operational resilience. The brief emphasizes that pandemics may have unique elements that financial institutions need to incorporate in the scenarios to test their operational resilience.
Supervisory discussions at the international level have recently shifted toward achieving operational resilience more broadly. BoE is the first national authority to have issued a consultation on its operational resilience expectations. BoE defines operational resilience as the ability of firms and the financial sector to prevent, adapt, respond to, recover from, and learn from operational disruptions. The objective of addressing operational resilience of financial institutions to IT outages and cyber attacks has clearly motivated the BoE consultation as well as the international supervisory discussions. However, as seen in the disruption that COVID-19 outbreak has caused in recent weeks, financial institutions need to review and ensure that their operational resilience procedures are also fit for purpose during pandemics.
As shown by the recent spate of supervisory guidance in relation to the COVID-19 outbreak, pandemics may have unique elements that financial institutions need to incorporate in the scenarios to test their operational resilience. International efforts to come up with operational resilience standards should take into account these unique elements, including the following:
- Critical or essential employees—It is important to identify the critical functions and employees who support important business services as well as to ensure employee safety. Financial institutions should ensure that employees can safely resume their duties (remotely, if necessary) so that business services can recover as quickly as possible.
- IT infrastructure—Financial institutions should ensure that their IT infrastructure can support a sharp increase in usage and take steps to safeguard information security.
- Third-party service providers—Financial institutions should ensure that their external service providers and/or critical suppliers are taking adequate measures and are sufficiently prepared for a scenario in which there will be heavy reliance on their services.
- Cyber resilience—Financial institutions’ cyber resilience processes should remain vigilant to identify and protect vulnerable systems. These processes should be able to detect and respond to cyber attacks and help an institution recover from them.
Related Links
Keywords: International, Banking, Insurance, Securities, COVID-19, Business Continuity, Operational Risk, Cyber Risk, Third-Party Arrangements, Operational Resilience, BoE, BIS, FSI
Previous Article
EBA Sets Out Supervisory Convergence Plan for 2020Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
