BNM published a policy document that sets out its requirements for the management of technology risk by financial institutions in Malaysia. In line with the proportionality principle, larger and more complex financial institutions are expected to demonstrate risk management practices and controls that are commensurate with the increased technology risk exposure of such institutions. The policy document comes into effect on January 01, 2020.
All financial institutions shall observe minimum prescribed standards in the policy document to prevent the exploitation of weak links in interconnected networks and systems that may cause detriment to other financial institutions and the wider financial system. The control measures set out in Appendices 1 to 5 serve as a guide for sound practices in defined areas. Financial institutions should be prepared to explain the risk management practices that depart from the control measures outlined in the Appendices and to demonstrate their effectiveness in addressing the technology risk exposure.
A financial institution must ensure that the technology risk management framework is an integral part of its enterprise risk management framework. The technology risk management framework must include the following:
- Clear definition of technology risk
- Clear assignment of responsibilities for the management of technology risk at different levels and across functions, with appropriate governance and reporting arrangements
- Identification of technology risks to which the financial institution is exposed, including risks from the adoption of new or emerging technology
- Risk classification of all information assets or systems, based on the "criticality"
- Risk measurement and assessment approaches and methodologies
- Risk control and mitigation
- Continuous monitoring to timely detect and address any material risks
Related Link: Policy Document (PDF)
Effective Date: January 01, 2020
Keywords: Asia Pacific, Malaysia, Banking, Insurance, Technology Risk, Governance, Operational Risk, Proportionality, BNM
Previous ArticleECB Publishes Results of Comprehensive Assessment for Nordea Bank
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.