28 March 2018
On 23 February 2018, Bank Negara Malaysia (“BNM”) issued a discussion paper on “Responsibility Mapping” (“Discussion Paper”) which sets out its thinking for a framework relating to responsibilities of individuals holding senior leadership positions in financial institutions.
BNM has introduced various reforms in recent years to strengthen corporate governance in the Malaysian financial system. With efforts to raise the bar for existing corporate governance standards substantially in place, the Discussion Paper explains that BNM is now sharpening its focus on the equally important, softer, aspects of governance (i.e. organisational culture and conduct). Leaders of financial institutions have a significant influence over organisational culture through the tone they set from the top, in their actions, decisions and attitudes. The Discussion Paper notes that clarity on the roles, responsibilities and accountability will incentivise leaders to take greater ownership in fostering a sound culture and addressing misconduct risk.
The Discussion Paper outlines what BNM’s approach to responsibility mapping entails through the following three key elements:
- identifying the senior roles within each financial institution;
- allocating responsibilities of the senior roles to specific individuals; and
- holding individuals in senior roles to account.
BNM invites feedback on the Discussion Paper. Responses must be submitted by 20 April 2018.