kuala lumpur: Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghafoor said crisis preparedness for Malaysia’s financial institutions is crucial, especially in navigating an increasingly complex and interconnected global financial environment.
He said all stakeholders need to play their role and explore ways to address or resolve potential failures of financial institutions during these uncertain times, and domestic financial institutions also need to be prepared to respond effectively to new cross-border financial shocks.
“Crisis preparedness is a shared responsibility and requires joint efforts from all stakeholders in building a resilient financial system,” Abdul Rasheed said in a keynote speech at the National Resolution Symposium (NRS) organised by the Malaysian Deposit Insurance Corporation today.
Shared responsibility involves regulators, government agencies, financial institutions and the financial industry as a whole. “Recognizing this, BNM has made inter-agency cooperation a cornerstone of its approach to crisis preparedness,” he said.
The central bank governor said the Financial Stability Executive Committee (FSEC) was established to support BNM’s statutory mandate of maintaining financial stability through its power to determine potential policy measures to prevent or mitigate risks.
“FSEC is made up of representatives from BNM, the Ministry of Finance and the Securities Commission Malaysia. This diverse membership ensures that decisions are balanced between protecting the public welfare, maintaining financial stability and sustaining economic growth,” he added.
Abdul Rasheed said financial institutions are encouraged to conduct regular testing of their recovery plans through crisis simulation drills.
“These simulations allow lead agencies to practice coordinated response and identify potential gaps in their approach, which is invaluable in filling gaps in crisis preparedness plans. They also help agencies assess how well their recovery plans would work in a real-life like scenario while enhancing understanding of the roles of individuals and teams during a crisis,” he added.
He also said financial institutions should focus on recovering from operational incidents.
“While an incident such as this will not necessarily trigger the activation of a formal recovery plan, the implementation of business continuity plans (BCPs) and communications strategies are key areas that require close attention. BCPs are designed to ensure that critical business functions can continue during and after a disruption, including pre-establishing support systems and procedures for continuing operations.”
Abdul Rasheed said poor implementation in these areas could significantly delay the recovery and cause operational issues to escalate into a larger crisis. “For example, a small IT disruption could lead to delays in important financial transactions, which could result in an undermining of market confidence,” he said.
The NRS brought together experts, speakers and participants from both local and international fields to continue discussions on how to respond to and resolve financial institution failures in uncertain times. The symposium was attended by approximately 450 participants, including senior management leaders of financial institutions in Malaysia.
