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July 21, 2024

BSP to introduce new guidelines on ‘operational resilience’ for financial institutions

The Bangko Sentral ng Pilipinas (BSP) is set to roll out new guidelines to ensure the “operational resilience” of all BSP supervised financial institutions (BSFIs) against potential shocks or disruptions that could lead to financial collapse, as part of its efforts to support sustainable and inclusive growth in the country.

The proposed guidelines, based on the Basel Committee on Banking Supervision Principles for operational resilience, will require banks to set up operational resilience frameworks on a solo or group-wide basis and identify, mitigate, plan, respond, restore, and learn from disruptive events to minimize the impact on critical operations.

The draft circular was circulated to banks for review, and the transition schedule for implementation will vary depending on the size of the banks.

The new guidelines aim to promote and strengthen BSFIs’ operational resilience, emphasizing the importance of their role in the smooth functioning of the real economy amidst increasing digitalization and evolving operational disruptions.

The circular will be implemented in three phases, requiring banks to submit transition plans with gap analyses and action plans to achieve operational resilience within one year from its effectivity.

By the second and third phases, big banks and digital banks should have integrated operational resilience plans with existing risk management systems, while thrift banks and rural banks should have developed and integrated operational resilience frameworks within three years.

The guidelines will cover various aspects of operational resilience, including risk management, business continuity management, cybersecurity, outsourcing rules, and recovery plans, and reporting on operational resilience will be required in the annual reports of BSFIs.