MAS Sets Out Good Practices to Manage Operational Risks ...

The paper covers operational risks associated with outsourcing and other third-party arrangements, along with risks in the areas of information/ ... Insights Solutions Learning Events About Insights ContentFormat PopularTopics ViewAllInsights Solutions Asset&LiabilityManagement CreditOrigination CreditRisk Data Economic Insurance Investments&Pensions LearningSolutions PortfolioManagement Regulatory&Accounting StructuredFinance Learning LearningSolutions CoursesByMarketSegment CoursesByTopicArea TRENDINGNOW LEARNMOREABOUTVIRTUALCLASSROOMCOURSES About OurCompany OurPeople OurNetworks CompanyNews ViewAllPressReleases ContentFormat Article Presentation Webinar&Video Whitepaper PopularTopics Asset&LiabilityManagement BankAsset&LiabilityManagementSolutions Buy-SideAsset&LiabilityManagementSolutions FeaturedProduct ViewA-ZProductList CreditOrigination CreditAssessment CreditDecisioning CreditMonitoring StructuredFinanceOrigination FeaturedProduct ViewA-ZProductList CreditRisk CreditResearch CreditRiskAdvisoryServices CreditRiskModeling RiskModelValidationServices FeaturedProduct ViewA-ZProductList Data DataTypes DataVisualization DataWarehouse EconomicData FinancialData NewsData PerformanceData RiskData SupplierRiskData FeaturedProduct ViewA-ZProductList Economic EconomicAdvisory EconomicData EconomicForecasts EconomicResearch EconomicScenarios EconomicWorkstations FeaturedProduct ViewA-ZProductList Insurance BusinessInsight EconomicCapital InsuranceAsset&LiabilityManagement InsuranceRegulatoryReporting RegulatoryCapital Valuation FeaturedProduct ViewA-ZProductList Investments&Pensions AssetAllocation FinancialPlanning InvestmentGovernance&Suitability InvestmentProductDesign Multi-AssetPortfolioManagement PensionPlan,Endowments,andConsultants PerformanceAttribution FeaturedProduct ViewA-ZProductList LearningSolutions AboutLearningSolutions AllCourses TargetedSolutionsforCompanies CoachDiagnosticTool FeaturedProduct ViewA-ZProductList PortfolioManagement Buy-SidePortfolioManagement CreditEconomicCapital PortfolioOptimization StrategicCapitalPlanning FeaturedProduct ViewA-ZProductList Regulatory&Accounting AllowanceforLoan&LeaseLosses(ALLL) BaselI,II,III CurrentExpectedCreditLossModel(CECL) InternalCapitalAdequacyAssessmentProgram(ICAAP) IFRS17InsuranceContracts IFRS9 LiquidityCompliance RegulatoryCapital RegulatoryReporting SolvencyII SimplifiedSupervisoryFormulaApproach(S)SFA StressTesting SystemicRisk FeaturedProduct ViewA-ZProductList StructuredFinance Buy-Side Issuers,Trustees&Lenders Risk&Regulatory Sell-Side FeaturedProduct ViewA-ZProductList LearningSolutions AboutLearningSolutions AllCourses TargetedSolutionsforCompanies CoachDiagnosticTool CoursesByMarketSegment CommercialBanking CorporateBanking CreditUnion InvestmentBanking RetailBanking SMEBanking WealthManagement CoursesByTopicArea Credit&Lending Industry&SectorAnalysis DebtMarketIssuance,Analysis&Investing Sales&Service/RelationshipManagement Coaching&Practice UniversalBanking Certifications OurCompany AboutMoody'sAnalytics RegionalLocations PressReleases Recognition OurPeople Experts Leadership JoinUs OurNetworks ConnectWithUs PartnerAlliance By RegulatoryNews March02,2021 MASandTheAssociationofBanksinSingapore(ABS)jointlyissuedapaperthatsetsoutgoodpracticesforthemanagementofoperationalandotherrisksstemmingfromnewworkarrangementsadoptedbyfinancialinstitutionsamidtheCOVID-19pandemic.Thepapercoversoperationalrisksassociatedwithoutsourcingandotherthird-partyarrangements,alongwithrisksintheareasofinformation/datagovernance,cybersecurity,fraudandstaffmisconduct,andlegalandregulatorycompliance.Thepapersharesgoodpracticesadoptedbyfinancialinstitutionstomitigatesuchrisksandencouragesinstitutionstoadopttheserisk-mitigationpracticesonarisk-proportionatebasis,accordingtotheirriskprofilesandbusinessactivities.Themitigationpracticessetoutinthepaperarealsoapplicabletonon-bankfinancialinstitutions. Thepaperpredominantlyfocusesontheareasofriskswherechanges,duetoremote working,haveadirectimpactontherisksandriskmanagementchallengesfacedbyfinancialinstitutions(referredtoas directrisks).However,poorlymanageddirectrisksofremoteworkingcouldleadtoheightenedrisks inareasthatmaynotbedirectlyimpactedbyremoteworking(referredtoasindirectrisks).Thepaperprovidesexamplesofindirectcredit,market,andreputationalrisks.Forinstance, changesinvalidationprocessesthatareconductedforcreditassessmentandmonitoring purposes,suchasreplacementofcustomersitevisits(forexample,toascertainexistenceofcollateralpledged) withcustomercalls,couldaffecttheabilityofafinancialinstitutiontoidentifyredflagsincustomercircumstances. Thepapersetsoutthekeyactionsthatfinancialinstitutionsareencouragedtoadopttomanageremoteworking risksandtheseactionsincludethefollowing: Withrespecttoestablishingappropriateinternalcontrolmechanisms,financialinstitutionsareencouragedtoimplementcompensatingcontrolstomanageidentifiedriskswithinriskappetitestatementsapprovedbyBoardandseniormanagement.Financialinstitutionsarealsoencouragedtoadoptrobustchangemanagementproceduressothatstaffmembersunderstandandimplementthenewprocessesandcontrolsasintended. Withrespecttooutsourcingandotherthird-partyarrangements,financialinstitutionsshouldevaluatechangestovendorriskprofileswithremoteworking,suchasbyassessingvendors’remoteworkingcontrolsandoperationalresilience.Financialinstitutionsshouldalsoimplementappropriatesafeguardsandcontingencyplanstoensurecontinuityofservices. Forappropriatedata/informationgovernance,financialinstitutionsshouldassesstherisksandimplicationsofinformationlosswhendeterminingwhichactivitiescanbeperformedremotely.Financialinstitutionsneedtostrengthenpreventiveanddetectivecontrolstomitigatetheserisks. Tomitigatecyberrisk,financialinstitutionsareencouragedtoimplementcontrolstoensurethatremoteworkinginfrastructureofstaff,includingpersonaldevices,aresecured. Financialinstitutionsshouldalsocontinuetoadoptsoundandrobusttechnologyriskmanagementpractices,tomanagehardwareandsoftwaredeployedtofacilitatelarge-scaleremoteworking,includingduringthepandemic. Keywords: AsiaPacific,Singapore,Banking,Insurance,Securities,COVID-19,OperationalRisk,OperationalResilience,TechnologyRisk,CyberRisk,OutsourcingArrangements,InternalControls,MAS PreviousArticle ECBPublishesGuideforDeterminingPenaltiesforRegulatoryBreaches NextArticle CMFRevampsOrganizationalStructureforRegulationandSupervision News FDICPublishesDraftPrinciplesonClimate-RelatedFinancialRisks TheFederalDepositInsuranceCorporation(FDIC)isconsultingonthestatementonprinciplesforthemanagementofclimateriskbylargefinancialinstitutions,withcommentperiodendingonJune3,2022. April04,2022 WebPage RegulatoryNews News ISSBProposesStandardsonSustainabilityandClimateDisclosures TheInternationalSustainabilityStandardsBoard(ISSB)proposedgeneralsustainability-relateddisclosurerequirementsandtheclimate-relateddisclosurerequirements. 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