The consultative document has a three-part focus;
- It proposes operational resilience principles that are aimed at increasing the capacity of banks to withstand disruptions due to potentially severe events.
- Proposes updated principles on operational risk focus on change management and information and communication technologies (ICT).
- Acknowledges that Covid-19 has raised the importance of operational resilience and of mitigating operational risk.
Recognizing that a concerted operational resilience effort may not prevent a significant shock resulting from a specific hazard, the Committee is looking for comment on proposed Principles for operational resilience that aim to mitigate the impact of potentially severe adverse events by enhancing banks' ability to withstand, adapt to and recover from them.
The Committee is of the view that operational resilience is also an outcome of effective operational risk management. Activities such as risk identification and assessment, risk mitigation (including the implementation of controls), and ongoing monitoring work together to minimize operational disruptions and their effects when they materialize. Given this natural relationship between operational resilience and operational risk, the Committee is proposing updates to its Principles for the sound management of operational risk (PSMOR).
Specifically, the Committee is proposing a limited number of updates to:
- align the PSMOR with the recently finalised Basel III operational risk framework;
- update the guidance where needed in the areas of change management and ICT, and
- enhance the overall clarity of the principles document.
By building upon existing guidance and current practices, the Committee is seeking to develop a coherent framework and avoid duplication. The proposed operational resilience principles focus on governance; operational risk management; business continuity planning and testing; mapping interconnections and interdependencies; third-party dependency management; incident management; and resilient cybersecurity and ICT.
Comments to the CDs should be submitted to the BIS (for link Click here ) by Friday 6 November 2020. All comments may be published on the BIS website unless a respondent specifically requests confidential treatment.
The Basel Committee is the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. The Committee reports to the Group of Central Bank Governors and Heads of Supervision and seeks its endorsement for major decisions. The Committee does not possess any formal supranational authority, and its decisions do not have legal force. Rather, the Committee relies on its members' commitments to achieve its mandate. The Basel Committee is chaired by Pablo Hernández de Cos, Governor of the Bank of Spain. More information about the Basel Committee is available here.