BNM R9G Business Continuity Management Policy by Bank Negara Malaysia: Interdependencies

Business Continuity Management Policy by Bank Negara Malaysia

Part B Policy Requirements 9:  BCM Framework and Methodology

Interdependencies

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Introduction

Bank Negara Malaysia issued the Business Continuity Management (BCM) Policy on 19 Dec 2022, providing guidelines for banks to establish effective business continuity practices. This report focuses on Part B - Policy Requirement 9, which outlines the BCM framework and methodology banks should consider when developing their business continuity management plans. Specifically, it highlights the requirements related to interdependencies.



Policy Requirement 9 emphasizes identifying and managing interdependencies within the BCM framework. Interdependencies refer to the relationships and dependencies between various business functions, processes, systems, and external entities within a bank's operations.

a. Identification of Interdependencies

Banks must conduct a comprehensive analysis to identify and document their interdependencies. This includes mapping the relationships between critical business functions, processes, systems, data, applications, infrastructure, and external parties (e.g., vendors, service providers). By understanding these interdependencies, banks can assess the potential impact of disruptions on their overall operations.

b. Impact Assessment

The policy requires banks to assess the potential impact of interdependencies on their business continuity. This involves evaluating the cascading effects of disruptions in one area on other interconnected functions. By understanding the potential ripple effects, banks can develop strategies to mitigate the impact and ensure the continuity of critical operations.

c. Mitigation Strategies

Based on the identified interdependencies and impact assessment, banks should develop mitigation strategies to minimize the risks associated with interdependencies. This may include redundancy measures, alternative arrangements, backup systems, and diversified suppliers or service providers. The goal is to reduce the vulnerability to disruptions in interconnected functions and ensure the availability of critical resources.

d. Collaboration and Coordination

The policy emphasizes collaboration and coordination with internal and external stakeholders to manage interdependencies effectively.

Banks should establish communication channels and working relationships with relevant departments, business units, vendors, service providers, and regulatory authorities. Collaborative efforts can help align strategies, share information, and coordinate responses during disruptions that affect interdependent functions.

e. Regular Review and Testing

To ensure the effectiveness of interdependency management, banks are encouraged to review and update their analysis of interdependencies regularly. This includes conducting periodic assessments, revisiting the impact on critical functions, and identifying any changes or emerging risks. Additionally, banks should incorporate interdependency testing into their business continuity testing and exercising activities to validate the effectiveness of mitigation strategies.

Conclusion

Policy Requirement 9 of Bank Negara Malaysia's Business Continuity Management Policy, highlights the significance of managing interdependencies within the BCM framework. Banks can enhance their resilience and ensure the continuity of critical operations during disruptions by identifying, assessing, and mitigating interdependencies.

Effective interdependency management involves identifying and documenting interrelationships, assessing the potential impact, implementing mitigation strategies, fostering collaboration, and conducting regular reviews and testing. By adhering to these requirements, banks can minimize the risks associated with interdependencies and ensure the smooth functioning of interconnected business functions.

Understanding and managing interdependencies is crucial in maintaining operational stability and effectively responding to disruptions, contributing to the overall resilience of the banking sector.