RBI releases updated “Guidance Note on Operational Risk Management and Operational Resilience’’ for Regulated Entities (REs) | Current Affairs | Vision IAS
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    Table of Content

    RBI releases updated “Guidance Note on Operational Risk Management and Operational Resilience’’ for Regulated Entities (REs)

    Posted 02 May 2024

    2 min read

    • The Guidance Note is based on the Basel Committee on Banking Supervision (BCBS) principles document (2021).
      • It has replaced the Guidance Note of 2005.
    • Need for Guidance Note: Rising frequencies of Operational Risks (ORs). 
      • OR is defined as the risk of loss resulting from failed internal processes, people and systems or from external events. 
        • E.g. Information Technology threats, geopolitical conflicts, etc.

     

    • Key highlight of guidelines:
      • Coverage: It includes REs such as Commercial banks, non-banking financial companies, cooperative banks, and All India Financial Institutions.
        • Earlier Note was applicable only to Scheduled Commercial Banks.
      • Emphasis on three lines of defence Model: It includes
        • Business unit (first line): A third party Responsible for managing the risks of products, services, etc.
        • Organizational Operational Risk Management Function (OORF) (Second line): To promote a sound Operational Risk management culture.
        • Audit function (Third line): Provides an independent assurance to works of the other two defence lines.
      • Third-party dependency management: is any external company, individual, etc. that provides critical goods or services to an organization.

     

    About Basel Committee on Banking Supervision (BCBS)

    • It is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.
    • Its 45 members comprise central banks and bank supervisors from 28 jurisdictions.
    • Tags :
    • RBI
    • Basel Committee on Banking Supervision (BCBS

    Articles Sources

    https://www.thehindubusinessline.com/money-and-banking/rbi-releases-updated-guidance-note-on-operati
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