[OR] [BSN] [E2] [C11] Set Impact Tolerance

Chapter 11

 Establishing Impact Tolerance – Stage 3 of the Implement Phase of BSN’s Operational Resilience Planning Methodology

Introduction

As part of the Implement phase in the Operational Resilience Planning Methodology, the stage of “Establishing Impact Tolerance” is a critical milestone for Bank Simpanan Nasional (BSN) in safeguarding its essential services.

This stage focuses on determining the maximum tolerable level of disruption that BSN can endure before its services result in intolerable harm to customers, the financial ecosystem, or regulatory obligations.

Establishing impact tolerance empowers BSN to set realistic recovery objectives and design proportionate resilience measures aligned with its mission to provide accessible financial services to all Malaysians.

Understanding Impact Tolerance in the Context of BSN

Impact Tolerance refers to the point at which a disruption to a critical business service would cause intolerable harm to stakeholders or threaten the viability of the bank.

Unlike Recovery Time Objectives (RTOs), which focus on internal recovery capabilities, impact tolerance is externally oriented and reflects stakeholder expectations, regulatory compliance, and systemic stability.

For BSN, a development bank with a mandate to promote financial inclusion, the failure of services such as ATM network availability, online banking for benefit disbursement, or over-the-counter transactions in rural branches could significantly affect low-income and underserved communities.

Therefore, the bank’s impact tolerance thresholds must reflect not only financial risk but also social, reputational, and regulatory consequences.

Implementation Steps and Examples

Step 1: Identify Critical Business Services

Before setting impact tolerances, BSN must identify which business services are “critical” — those whose disruption would pose a risk to its customers, operations, or systemic stability.

Example:

BSN identifies “Government Aid Disbursement via MyBSN Platform” as a critical service. This platform is used to transfer monthly subsidies and welfare payments to beneficiaries.

Step 2: Define Harms and Consequences of Disruption

BSN must outline the types of harm that disruption could cause, including financial loss, legal breach, customer distress, reputational damage, and systemic impact.

Example:

A 24-hour disruption in the MyBSN Platform during aid disbursement cycles could lead to:

• Delay in financial support for over 2 million B40 households.
• Escalation of public complaints and social media backlash.
• Breach of contractual SLA with the Ministry of Finance.
• Loss of public confidence in BSN as a reliable government-linked bank.

Refer to the impact Types

Step 3: Determine Maximum Acceptable Duration of Disruption

This is the core of impact tolerance — defining the duration and extent of disruption BSN can tolerate before consequences become unacceptable.

Example:

BSN determines that a maximum impact tolerance of 6 hours is acceptable for any disruption to its aid disbursement service. Beyond this point, significant societal and regulatory harm is anticipated.

Refer to content in Table 11-2: Maximum Impact Tolerance

Step 4: Engage Internal and External Stakeholders

Gather input from operational teams, risk management, regulators (e.g., Bank Negara Malaysia), and key partners to validate the impact tolerance levels.

Example:

BSN’s operational risk committee collaborates with the Ministry of Finance to align the impact tolerance for the aid disbursement platform with national social safety net policies.

Step 5: Document and Calibrate Impact Tolerances

BSN must clearly record impact tolerance thresholds and align them with Business Continuity Plans, Incident Response procedures, and Service Level Agreements.

Example:

BSN documents impact tolerances in the Operational Resilience Register. For each critical business service, the associated tolerance levels are linked to corresponding recovery plans and tested through scenario simulations.

Step 6: Conduct Scenario Testing and Validate Thresholds

Validate impact tolerance thresholds through plausible disruption scenarios. Adjust tolerances if test results show excessive risk or impractical recovery times.

Example:

A scenario test simulating a cyber-attack on BSN’s MyBSN platform shows recovery within 4 hours. However, system-wide load testing reveals potential delays in peak periods. As a result, BSN tightens monitoring controls and revises capacity planning to meet the 6-hour tolerance.

Step 7: Integrate into Operational Resilience Framework

The established impact tolerances should drive prioritisation in BSN’s investment decisions, controls, third-party risk assessments, and resilience initiatives.

Example:

Impact tolerances inform the upgrade of BSN’s disaster recovery infrastructure and the procurement of high-availability cloud services for critical digital platforms.

Table 11-1: Critical Business Services and Their Impact Tolerance

Notes on Derivation Methodology

• Regulatory Requirements: Services linked to compliance and national mandates (e.g., CBS-2, CBS-10) have shorter tolerances to avoid legal and reputational consequences.
• Customer Impact: Tolerances consider the criticality of the service to customers’ financial well-being (e.g., CBS-1, CBS-4).
• Service Interdependency: Infrastructure services like CBS-8 (Core Banking) affect multiple downstream functions, requiring tight tolerances.
• Volume & Frequency: High-frequency services (e.g., ATM usage, online transfers) are given stricter tolerance due to widespread impact.
• Business Continuity Capabilities: Consideration of recovery and alternate delivery mechanisms (e.g., agent banking, digital channels).

Table 11-2: Maximum Impact Tolerance

Notes for Use:

• Maximum Impact Tolerance: The longest time a service can be disrupted before causing intolerable harm.
• Impact Types: Categorises the types of consequences from disruption.
• Justifications / Assumptions: Provides reasoning behind the tolerance, useful for audits, updates, and scenario validation.

Table 11-3: Impact Types by Critical Business Services – Bank Simpanan Nasional

Key Impact Type Categories Referenced:

• Customer Impact – inconvenience, trust erosion, dissatisfaction
• Financial Impact – revenue loss, penalties, liquidity challenges
• Reputational Impact – negative media, stakeholder confidence loss
• Operational Impact – service bottlenecks, data issues, backlog
• Legal/Regulatory Impact – compliance breaches, reporting failures
• Systemic/Social Impact – disruption to national or community-level services

Summing Up ...

Establishing impact tolerance provides Bank Simpanan Nasional with a structured understanding of how much disruption its critical services can endure without causing unacceptable harm.

This ensures that resilience efforts are targeted and measurable. By embedding these thresholds into its broader operational resilience framework, BSN not only enhances its ability to serve vulnerable populations during crises but also reinforces public trust in its reliability as a national financial institution.

Moving forward, regularly reviewing and testing these tolerances will be key to sustaining a resilient and responsive banking environment in Malaysia.

 

	Operational Resilience for Financial Services: The BSN Malaysia Approach
	"Implement" Phase of the Operational Resilience Planning Methodology

 

 

OR Planning Methodology Phases		Plan	Implement	Sustain

Gain Competency: For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.

 

More Information About Blended Learning OR-5000 [BL-OR-5] or OR-300 [BL-OR-3]

To learn more about the course and schedule, click the buttons below for the OR-3 Blended Learning OR-300 Operational Resilience Implementer course and the OR-5 Blended Learning OR-5000 Operational Resilience Expert Implementer course.

	If you have any questions, click to contact us.