Banks across the EU are struggling to meet the operational resilience and risk guidelines established by the Basel Committee in 2021.
An early 2023 evaluation of the adoption of these Principles—aimed at strengthening banks’ capacity to handle operational risk events that could lead to significant failures or widespread market disruptions—revealed varying levels of effectiveness and maturity among different banks and jurisdictions.
Common challenges identified include the mapping of interconnections and interdependencies related to critical operations and defining acceptable tolerance levels for disruptions. While many banks have established governance for operational risk management, the roles and responsibilities of board members concerning operational resilience are still evolving.
The assessment also highlighted deficiencies in the effectiveness of self-assessment tools designed to identify threats and vulnerabilities, alongside insufficient mapping of critical interconnections.
In terms of business continuity, banks are encountering significant challenges regarding the comprehensive delivery of essential operations and the assessment of potential scenarios’ plausibility and severity. Some banks need to develop robust business continuity and contingency plans, particularly concerning critical operations provided by third-party services.
The Basel Committee emphasizes that banks must invest further effort to enhance their practices, which will require sufficient resources and prioritization. Complete adoption of these Principles may take an additional two years to achieve.