The Basel Committee on Bank Supervision (“BCBS“) has published a report setting out its “Principles for Operational Resilience”. In the report, BCBS notes that the Covid-19 pandemic has highlighted both the benefits and risks associated with the increased adoption of novel technology in the financial services industry. It then explains that the definition of “operational resilience” adopted in the report and the elements that BCBS considers to be essential to “operational resilience” are largely derived from existing guidance previously issued by BCBS or other national supervisors.
Finally, the report sets out BCBS’ seven principles spanning the following categories:
- operational risk management;
- business continuity planning and testing;
- mapping of interconnections and interdependencies of critical operations;
- third-party dependency management;
- incident management; and
- resilient information and communication technology, including cyber security.
This report builds on updates to BCBS’ “Principles for the Sound Management of Operational Risk” and its guidance should not be considered in isolation but as an integral part of a bank’s forward-looking operational resilience approach in line with its operational risk appetite and tolerance for disruption.