[BI] BCM Policy Issued by the Bank Indonesia

Chapter 13: Industry-Specific BCM Policy Landscape in Indonesia

The financial sector in Indonesia plays a vital role in the country's economic development. To ensure its stability and protect depositors, Bank Indonesia (BI), the central bank of Indonesia, actively promotes sound risk management practices, including Business Continuity Management (BCM).

However, unlike some other central banks in Southeast Asia, BI does not currently have a publicly available, standalone BCM policy document. Despite this, BI does influence BCM practices for Indonesian FIs through various regulations, guidelines, and supervisory activities.

Regulatory Framework for BCM in Indonesia

BI emphasizes the importance of BCM for maintaining operational resilience and mitigating disruption within the Indonesian financial system. Key regulations and supervisory tools that influence BCM practices for FIs include:

Regulation of BI No. 17/23/PBI/2015 concerning Implementation of Risk Management by Commercial Banks: This regulation emphasizes the role of BCM as a key component of a comprehensive risk management framework for banks. It requires banks to:
Identify and assess potential threats and vulnerabilities impacting their operations.
Develop and maintain Business Continuity Plans (BCPs) that outline recovery strategies for critical business functions (CBFs) following disruptions.
Regularly test and update BCPs to ensure their effectiveness.
Circulars and Guidelines: BI may issue specific circulars or guidelines that address BCM practices for FIs. These pronouncements may provide further details on risk assessment methodologies, BCP development requirements, or testing procedures.
It's important to note that these circulars may not be publicly available and may require direct communication with BI for access.
Supervisory Tools: BI utilizes various supervisory tools, including on-site examinations and off-site monitoring, to assess the adequacy and effectiveness of FIs' BCM practices. These assessments may identify areas for improvement and ensure FIs are adhering to BI's expectations for BCM.

Focus Areas for Indonesian FIs

While BI doesn't have a single, comprehensive policy document, some key focus areas for BCM within Indonesian FIs can be identified through the regulations and supervisory practices mentioned above:

Risk-Based Approach: Similar to other central banks, BI encourages FIs to adopt a risk-based approach to BCM, considering their size, complexity, and risk profile.
Focus on National Risks: BCMs in Indonesia should address potential disruptions specific to the Indonesian context. This may include natural disasters like earthquakes and volcanic eruptions, cyberattacks, technological disruptions, and infrastructure outages.
Alignment with BI Regulations: Ensuring BCM programs comply with all relevant regulations and guidelines issued by BI remains crucial.
Testing and Exercising: Regularly testing BCPs through simulations and exercises is essential to identify weaknesses and ensure operational readiness during disruptions.

Summing Up ...

Although BI doesn't have a single, standalone BCM policy document, their regulations and supervisory practices provide a framework for BCM expectations in Indonesia. Understanding these expectations is essential for FIs to develop and maintain robust BCM programs. Effective BCM practices contribute to the overall resilience of the Indonesian financial system and public confidence in the banking sector.

Note: Due to the potential lack of publicly available information, further research is recommended to stay updated on the latest BCM expectations from BI. This may involve:

Monitoring BI's website for new regulations, circulars, or pronouncements related to BCM.
Consulting with industry associations or regulatory experts for insights into BI's supervisory practices regarding BCM.