Featured Product

    BNM Proposes Guidance on Business Continuity and Climate Risk Aspects

    December 29, 2021

    The Bank Negara Malaysia (BNM) proposed revisions to the guidelines on business continuity management for financial institutions, with the feedback period ending on March 31, 2022. The proposals aim to facilitate the development and implementation of a robust business continuity management framework, policies, and processes that are integrated with the overall risk appetite and reinforce sound risk management practices. The aim is to preserve the continuity of critical business functions and essential services within a specified timeframe in the event of an operational disruption. BNM also issued a summary of discussions at meeting of the Joint Committee on Climate Change and published the proposed requirements and guidance on climate risk management and scenario analysis. The feedback period on the consultation ends on March 31, 2022 and the final policy document is expected to come into effect on June 01, 2022, with certain exceptions.

    Recognizing the characteristics of climate risks, the consultation on climate risk management sets out the principles and requirements on the management of climate-related risks by financial institutions, As per the consultation, financial institutions shall, among others,

    • Ensure that the board and senior management exercise effective oversight of climate-related risks to safeguard the financial institution’s resilience against the adverse impact of climate change. 
    • Embed climate-related risks into their internal control frameworks across the three lines of defense to ensure the robust management of material climate-related risks.
    • Embed climate risks into the risk appetite framework, including the potential long-term impact of these risks as drivers of existing types of material risks, and reflect these material risks in the internal capital adequacy assessment process.
    • Integrate material climate risk considerations into their existing enterprise-wide risk management framework and support a reliable approach to identifying, measuring, monitoring, and controlling material risks.
    • Continuously develop data capabilities, tools, and methodologies to effectively aggregate and report material climate risks and actively monitor and escalate material and potential climate risks, supported by appropriate data, risk analysis, and clear reporting procedures.
    • Understand the transmission and impact of climate risks on the other existing risk types and ensure that their risk management systems and processes account for material climate-related risks.
    • Produce reliable, meaningful, and comparable climate-related disclosures, to support informed decisions by stakeholders and reinforce the effective management of material climate-related risks in the financial sector.
    • Employ scenario analysis to determine the resilience of their business strategies to material climate risks and insights from the scenario analyses shall inform the risk profile, risk appetite, and risk management framework.

    With respect to scenario analysis and stress testing, BNM will provide additional guidance to the financial institutions in a forthcoming discussion paper on climate change stress test, with this consultation set to be released in the first quarter of 2022. Additionally, a Task Force on Climate-Related Financial Disclosures (TCFD)-aligned application guide for disclosures on climate-related risks by financial institutions is expected to be issued for public consultation in January 2022, as mentioned in the statement summarizing discussions at the meeting of the Joint Committee on Climate Change. The BNM-regulated financial institutions are expected to work toward adopting the stretch recommendations that are fully aligned with TCFD disclosures, by the end 2024. As an extension of this work, disclosure guides for businesses will be developed in 2022. The Joint Committee also plans to publish a detailed report in 2022, based on its various engagements and surveys, to explore opportunities and challenges for the financial industry to meaningfully support the climate transition. 

     

    Related Links

    Comment Due Date: March 31, 2022 (Both Proposals)

    Effective Date: June 01, 2022 (Climate Risk Guidance)

    Keywords: Asia Pacific, Malaysia, Banking, Climate Change Risk, ESG, Disclosures, Reporting, Stress Testing, Scenario Analysis, TCFD, Sustainable Finance, Business Continuity, Operational Risk, Operational Resilience, BNM

    Featured Experts
    Related Articles
    News

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597