OM-5.1 OM-5.1 Introduction
Why do Financial Institutions Need Business Continuity Plans?
OM-5.1.1
All businesses may experience serious disruptions to their business operations. These disruptions may be caused by external events such as flooding, power failure or terrorism, or by internal factors such as human error or a serious computer breakdown. The probability of some events may be small, but the potential consequences may be massive, whereas other events may be more frequent and with shorter time horizons. The Joint Forum (the Basel Committee on Banking Supervision (BCBS), the International Organisation of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS)) have given additional background and context to the need for business continuity in its paper of August 2006 titled "High Level Principles for Business Continuity" (www.bis.org).
October 07OM-5.1.2
According to the Joint Forum, in its paper, Business Continuity is "a whole of business approach for insuring that specified operations can be maintained or recovered in a timely fashion in the event of disruption. Its purpose is to minimize the operational, financial, legal, reputational, and other material consequences arising from a disruption". The objectives of a good business continuity plan ("BCP") are:
(a) To minimise financial loss to the licensee;(b) To continue to serve customers and counterparties in the financial markets; and(c) To mitigate the negative effects that disruptions can have on a licensee's reputation, operations, liquidity, credit quality, its market position, and its ability to remain in compliance with applicable laws and regulations.October 07OM-5.1.3
Banks play a critical role in an economy, in providing payment services, as holders of people's savings, and as providers of finance. Hence, a BCP is especially critical for banks. It helps ensure that their business operations are resilient and the effects of disruptions in service are minimized and thus helps maintain confidence in the banking system.
October 07Scope and Key Elements of a BCP
OM-5.1.4
The requirements of this Chapter apply to all retail and wholesale banks (whether locally incorporated or a branch).
October 07OM-5.1.5
Branch Licensees of foreign banks may apply alternative arrangements to those specified in this module, where they are subject to comprehensive BCP arrangements implemented by their head office or other member of their group, provided that:
(a) They have notified the CBB in writing what alternative arrangements will apply;(b) They have satisfied the CBB that these alternative arrangements are equivalent to the measures contained in this chapter, or are otherwise suitable; and(c) The CBB has agreed in writing to these alternative arrangements being used.October 07Implementation
OM-5.1.6
The requirements in this Chapter must be complied with in full by 1 October 2007. Failure to comply with these requirements after that will trigger a supervisory response, which may include formal enforcement measures, as set out in Module EN (Enforcement).
October 07OM-5.1.7
For contingency planning relating to outsourcing activities, see Section OM-3.6.
October 07
