THE Philippine central bank can further strengthen its regulations on operational resilience in the financial system, the International Monetary Fund (IMF) said in a technical assistance report.

The high-level summary report came after the IMF’s Monetary and Capital Markets department delivered a hybrid technical assistance mission to assist the Bangko Sentral ng Pilipinas (BSP) in developing a supervisory framework for operational resilience.

The multilateral institution conducted an earlier mission in 2022 to help the BSP craft a regulatory framework for operational resilience.

“The authorities have since developed the draft regulation leveraging on existing policies on operational risk management, business continuity management, IT risk and outsourcing, among others,” the IMF said. This draft circular has already been released to the public for comment.

“A follow-up hybrid mission during May 2024 addressed developing a supervisory framework for operational resilience,” the IMF said. This included both virtual and in-person missions to get updates on the developments since the earlier regulation and provide feedback, among other initiatives.

The IMF said the central bank will need to “closely manage the communication strategy with its supervised institutions to clarify the potential areas of additional effort to implement operational resilience.”

“In its onsite examinations, the BSP has established several touchpoints where operational risk management is assessed which it can leverage to include assessment of operational resilience.”

“There are benefits leveraging the ongoing role of the Technical Working Group on Operational Risk to help smooth implementation and integration into the supervisory framework,” it added.

The IMF recommended that the Basel Core Principle 25 (BCP25) should be reflected in the draft regulation. BCP25 covers operational risk and operational resilience.

It also recommended integrating operational resilience into its risk rating methodology and developing internal guidelines for supervisors on how to assess operational resilience.

The BSP should also integrate operational resilience assessment as part of risk-based supervisory framework and conduct thematic reviews focusing on domestic systemically important banks, it added. — Luisa Maria Jacinta C. Jocson

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