Welcome to the latest edition of The Current Account! This month's headlines explore the challenges banks face with Operational Resilience and the latest news on Open Banking
Banks struggle with Operational Resilience….
- In March 2021, the Basel Committee established principles for operational resilience and revised the principles for the sound management of operational risk, aiming to strengthen banks' capacity to withstand events associated with operational risk. These events have the potential to lead to significant operational failures or widespread disruptions in financial markets.
- In October, the Basel Committee on Banking Supervision convened to assess recent market shifts and global banking system risks. The meeting included discussions on various policy and supervisory initiatives, with a particular emphasis on the importance of banks and supervisors remaining vigilant to the evolving outlook, including the safeguarding of operational resilience.
- The overall verdict was that Banks are facing challenges in aligning with the Basel Committee's operational resilience guidelines with differing effectiveness across jurisdictions. Issues encompass mapping interconnections, specifying disruption tolerances, and establishing board roles. Identified gaps in self-assessment tools and business continuity planning highlight the necessity for improved practices, with full adoption potentially requiring up to two additional years.
- To provide further guidance, the Basel Committee plans to publish a supervisory newsletter addressing these concerns in due course.
- Elisabeth Stheeman, External member of the Financial Policy Committee, recently delivered a speech at the London School of Economics emphasising the same points outlined by the Basel Committee.