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With the Covid-19 outbreak shining a light on the financial sector’s operational toughness, global banking regulators are consulting on new risk and resilience principles.

The Basel Committee on Banking Supervision issued a consultation paper on proposed principles designed to ensure that banks can withstand severe disruptions.

In the wake of the global financial crisis, regulators sought to mitigate operational risk and enhance the banking sector’s resilience. Those efforts have, in recent years, focused largely on technology-related threats, such as cybersecurity breaches, as the industry has grown increasingly reliant on technology.

Now, the Covid-19 outbreak has intensified the urgency of preparing for major negative events.

“Pandemic-related disruptions have affected information systems, personnel, facilities and relationships with third-party service providers and customers,” the committee said.

“In addition, cyber threats (ransomware attacks, phishing, etc.) have spiked, and the potential for operational risk events caused by people, failed processes and systems has increased as a result of greater reliance on virtual working arrangements,” it said.

Among other things, the proposed principles aim to enhance banks’ ability to “withstand, adapt to and recover from” severe disruptions.

They also stress the importance of effective operational risk management, including activities such as identifying and addressing risk, risk controls, and ongoing monitoring to minimize operational disruptions.

The proposed principles are out for comment until Nov. 6.

“Given the critical role played by banks in the global financial system, increasing banks’ resilience to absorb shocks from operational risks, such as those arising from pandemics, cyber incidents, technology failures or natural disasters, will provide additional safeguards to the financial system as a whole,” the committee said.