KUALA LUMPUR: The preparedness of financial institutions in Malaysia to face crises is critical, particularly as they navigate an increasingly complex and interconnected global financial landscape, said Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour.
He said that all stakeholders must play their part and seek ways to address or resolve the potential failure of financial institutions during these uncertain times, and financial institutions in the country must also be ready to respond effectively to emerging cross-border financial shocks.
“Crisis preparedness is a shared responsibility that requires collective efforts from all stakeholders involved in building a resilient financial system,” Abdul Rasheed said in his keynote speech at the National Resolution Symposium (NRS) organised by Malaysia Deposit Insurance Corporation today.
The shared responsibility involves regulators, government agencies, financial institutions, and the financial industry as a whole. “Recognising this, BNM has made interagency cooperation the foundation of its approach to crisis preparedness,” he said.
The central bank governor said the Financial Stability Executive Committee (FSEC) has been established to support BNM’s statutory mandate of maintaining financial stability through its power to decide on potential policy actions to prevent or mitigate risks.
“The FSEC comprises representatives from BNM, the Ministry of Finance and the Securities Commission Malaysia. This diverse membership ensures that decisions made strike a balance between safeguarding public welfare, maintaining financial stability, and sustaining economic growth,” he added.
Abdul Rasheed said financial institutions are encouraged to conduct regular tests of their recovery plans through crisis simulation exercises.
“These simulations allow key entities to practise coordinated responses and identify potential gaps in their approach, which is highly beneficial in closing gaps in crisis response measures. They also help institutions assess how well recovery plans function in real-world-like scenarios, while reinforcing understanding of individual and team roles during a crisis,” he added.
Furthermore, he said financial institutions should focus on recovery from operational incidents.
“Although such incidents may not always trigger the threshold for activating formal recovery plans, implementing business continuity plans (BCP) and communication strategies are critical areas requiring close attention. BCP are designed to ensure that critical business functions can continue during and after disruptions, including having pre-established support systems and procedures in place to maintain operations.”
Abdul Rasheed remarked that weak implementation in these areas can significantly slow recovery and escalate operational issues into larger crises. “For example, a minor IT disruption can delay critical financial transactions, which could subsequently undermine market confidence,” he said.
The NRS brought together experts, speakers, and participants from both domestic and international sectors to continue discussions on how to address or resolve the failure of financial institutions in times of uncertainty. The symposium was attended by nearly 450 participants, including senior management leaders from Malaysian financial institutions.
