The Bangko Sentral ng Pilipinas (BSP) has issued the guidelines for both banks and non-banks’ operational resilience to address threats to businesses as well as ensure continuous delivery of financial services in support of a sustainable economic growth.
BSP Governor Eli M. Remolona Jr. said Wednesday, Nov. 6, that the new circular on operational resilience that he signed on Oct. 28, will be “crucial given the increasing threats to business operations.”
“They complement our previous efforts to strengthen the financial resilience of supervised institutions (and) operational resilience ensures the overall safety and soundness of both individual institutions and the entire financial system,” he said.
The Monetary Board, in its Resolution No. 1170 dated Oct. 10, 2024, approved the guidelines on operational resilience to strengthen BSP supervised financial institutions' (BSFls) ability to manage and mitigate the impact of disruptions, particularly on their critical operations and especially “given frequent natural disasters and fast-paced advancements in technology.”
The BSP said Wednesday that the guidelines will also help maintain uninterrupted financial services to the public “despite prolonged business interruptions” such as those experienced during the Covid-19 pandemic.
The central bank said the guidelines, known as BSP Circular No. 1203, require BSFIs to integrate operational resilience with existing governance structures and related risk management processes, such as operational risk management, business continuity management, cyber resilience, third-party risk management, and recovery plans.
The guidelines incorporates the “Principles for Operational Resilience” issued by the Basel Committee on Banking Supervision, said the BSP.
It also noted that in establishing an operational resilience framework, BSFIs must identify critical operations, which, if disrupted, would cause material harm to their customers, their business, and/or the financial system. “They must also set tolerance levels for disruption or how much disruption they can handle while still delivering critical operations (and) BSFIs must ensure that they remain within their established limits,” said the BSP.
The new circular will be implemented in phases for a smooth transition and implementation, the BSP added.
“BSFIs must submit to the BSP an accomplished self-assessment questionnaire within one year from the circular’s effectivity. This will guide them in identifying areas for improvement and preparing action plans for their operational resilience frameworks,” said the central bank.