BCBS – Proposed – Releases consultative documents on principles for operational risk and operational resilience

August 6, 2020 – Operational resilience principles aim to increase the capacity of banks to withstand disruptions due to potentially severe events, such as the recent Covid-19 pandemic. Updated principles on operational risk focus on change management, and Information and Communication Technologies (ICT).

Principles for Operational Resilience
The recent growth of technology-related threats increased the importance of banks’ operational resilience, Covid-19 made need to address these threats more pressing. Banks play a critical role in the global financial system so increasing banks’ resilience to absorb shocks from operational risks gives extra safeguards to the whole financial system.

Recognizing that a concerted operational resilience effort may not prevent a significant shock resulting from a specific hazard, Basel proposed operational resilience principles. Principles aim to mitigate the impact of potentially severe adverse events by enhancing banks’ ability to withstand, adapt to and recover from them.

Principles for Operational Risk
Operational resilience is also an outcome of effective operational risk management. Activities such as risk identification, assessment, risk mitigation, and ongoing monitoring work together to minimize operational disruptions and effects when they materialize.

Given the relationship between operational resilience, operational risk, Basel proposed updates to its principles for the sound management of operational risk (PSMOR). Proposed updates to align PSMOR with recently finalized Basel III operational risk framework, update guidance where needed in areas of change management and ICT. Enhance overall clarity of principles document, which are largely derived and adapted from existing guidance on outsourcing, business continuity, and risk management.

Public comments requested by November 6, 2020.

For more information, visit www.bis.org

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