By BERNAMA / Pic By MUHD AMIN NAHARUL

FINANCIAL institutions are constantly reviewing and updating the frameworks of their business continuity plans (BCPs) and disaster recovery plans (DRPs), as well as incorporating them into baseline scenarios for the foreseeable future, which will strengthen financial institutions’ ability to anticipate, prepare for, and adapt to future shocks.

In the Financial Stability Review for the second half of 2020 (2H20) released by Bank Negara Malaysia (BNM) yesterday, the central bank revealed that Covid-19 pandemic has continued to test the operational resilience and business continuity frameworks of financial institutions, with the resurgence of infection risks and an extended period of remote working arrangements.

“Therefore, adaptations made to BCPs since the first Movement Control Order (MCO) in March 2020 have enabled financial institutions to remain operationally resilient without any major operational, IT and cyber disruptions, thus ensuring the continued provision of essential financial services to the public,” it added.

BCPs and DRPs provide greater assurance of their ability to maintain critical operations and increase the speed with which business operations are able to adapt to changing conditions in the event of a prolonged full-scale lockdown at critical premises, sudden unavailability of key third-party service providers, and major breakdowns in IT infrastructure supporting remote working arrangements.

BNM said total operational risk losses among financial institutions in 2H20 remained stable and insignificant, similar to previous years, with losses from the materialisation of operational risk events amounted to 0.5% and 0.04% of total profit before tax of banking institutions (including development financial institutions) and insurance and takaful operators respectively.

Malaysia’s payment systems continued to operate smoothly without major disruptions, with the large-value payment system, Real-time Electronic Transfer of Funds and Securities System (Rentas), and retail payment systems (RPS) maintaining high system availability at above 99.9%.

Meanwhile, online payment transactions continued to increase, driven by e-commerce activity as consumers adjusted to movement restrictions, with a total of 1.1 billion transactions amounting to RM1.3 trillion conducted in RPS in 2H20, versus 800 million transactions amounting to RM1 trillion in 1H20.

For RPS, a slightly higher number of incidents of isolated disruptions were reported in 2H20 compared to 1H20. However, these were swiftly resolved and did not cause major disruptions, with contingency and recovery plans operating as expected.

“For Rentas, the completion of technology refresh efforts since the first quarter of 2020 has further reduced potential risks of disruptions.

“As a result, the number of incidents that caused isolated disruptions to Rentas declined by 32% in 2H20, compared to 1H20,” it said.

The central bank further said both Rentas and RPS operators have maintained split operations despite the lifting of movement restrictions following the first MCO in the 1H20.

“These operators have also further enhanced their BCPs to incorporate remote access capabilities and security to enable more staff to work from home. Personnel were also identified and trained to increase the number of reserve staff available to readily take over critical operations if necessary.