Long term business continuity in the banking sector has so far been ineffective at reducing difficulties caused by economic challenges, the by-product of institutionalised short-termism. Business continuity is defined as the ability of an organization to ensure major operations and business functions are not severely impacted by unplanned events or disasters (Hannabuss, 2016).Banks Use several principles to ensure effective implementation of business continuity practises.The first Segment of this essay will consist of a review evaluating the implementation efficacy of business continuity by banks in different circumstances. Banks use Basel three global regulatory directives to reduce operational risks, a bank must therefore put in place a clearly defined team whose involvement includes planning testing and ensuring the currentness of business continuity practises needed in an emergency.

To minimise the possibility of downtime computer systems should be regularly tested thoroughly reviewed and updated. This would include changes in information technology software or full system upgrades. To maintain customer confidence the bank must ensure it has effective communication. This should be through email, phone messages, intranet to staff, and website of the bank. Sample messages can be developed for certain crisis and situations to avoid delays in communication and to disseminate information.  Staff need to be prepared to act as spokespersons in released and social updates. (Basel Framework, 2021)

Furthermore,to ensure effective deployment of a BCP plan the established team would have to produce a plan on the most important operations such as regulatory implications, brand concerns, customer protection. These Would then be mapped to people roles, facilities office space storage for cashand other documents of clients for loan security, applications such as the software for use and equipment required such as safes, teller machines etc.These should be done ensuring minimal delay in recovery of operations. (Basel Framework, 2021)

Uninterrupted access to business resources can be achieved by ensuring data protection, mobility, developing effective and efficient work methods especially as seen in the Covid period where remote work became normal. Customer care strategies can be developed to reduce queues. Data centres must have continuous power back up and ability to switch from one centre to another in case of challenges. This study aims are to examine the effectiveness of business continuity in the banking sector. To determine which practices are used, a review of the top BCM(business continuity management) practices in banking will be carried out, corresponding to the results of the top-performing banks in the sector. (Basel Framework, 2021)

The common denominator in macroeconomic instability caused by banks is a fundamental lack of fiscal discipline a by-product of poor leverage control, out of line with Basle iii rules where banks are required to hold the minimum core capitalization of 8% against all risky assets to reduce insolvency(Crotty, 2009). Business continuity is an organisation's ability to deliver products or services in-line withdrew-established standards following a disruptive event (Hannabuss, 2016)As mentioned by Salter (2013), short-termism is prevalent in business management, leadership, and employee principles leading to over-reliance on limited profiteering practices. According to the CFA Institute (2021) (Chartered Financial Analyst) Short-termism is defined as a disproportionate focus on short-term results at the detriment of long-term benefits.  Investors focus on quarterly earnings, with less consideration given to long-term value creation. For instance, the use of near-zero interest rates for extended periods has compressed spreads and narrowed net-interest margins. A form of traditional banking that involves lending high and borrowing low, this is unsustainable in the long run because competitors can offer more value dense services(Claessens, Coleman and Donnelly, 2018). Resulting in financial technology companies such as PayPal outperforming many traditional banks by orders of magnitude. A  Lack of proper core capitalization and focusing mainly on short-term Gaines fundamentally breaches the Basel three rules.

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Past banking decisions by banks considered too big to fail created global financial crisis bubble burst in2008 ,illustrating failures in business continuity practises. These outcomes easily could have been mitigated if leading firms such as Bear Stearns had not admitted vast sums of un-collateralised loans or exposed the bank to toxic assets such as (CDO`S) collateralised debt obligations (Fatal Risk, 2021). According to Hayes (2021), the liquidation authority created serval federal frameworks in alignment with the current Dodd-Frank wall street reform and consumer protection act. Under the current federal framework, the consumer financial protection bureau has the governments authorisation to breakup banks that pose a significant risk to the stability of the united states financial solidity, grounds for such would include excessive holdings in risk-based markets. As mentioned by stout (2011) in alignment with the Volckerrule, banks are restricted in their investments and cannot invest in speculative trading, in addition banks are not allowed to be in business with private equity firms or trading funds considered too risky or too big to fail (Ioannou, Wójcik and Dymski, 2019).Banks inherently attempt to expand, this presents a financial challenge, in order to follow the Wall Street Reform Act a bank must maintain a minimum of 8% core capitalisation on all risk-weighted assets (Ferri and Pesic, 2017). A federal attempt to minimize conflicts of interest, a valid restriction of the core capitalization on risky assets places banks in a long-term financially unsustainable position, a failure in business continuity management in the long run. Competitors search as PayPal can circumnavigate these issues by offering a varied set of services reducing their product portfolio risk and out competing banks.

All businesses operations hinge on cash flow and in principle they are several   disruptive situations that can compromise a banks operation (Burtlesand Noakes-Fry, 2016). Burtles (2016)  defines loss of peoples scenario in which employees are left without access to work premises due to absence caused by sickness. Contemporary scenarios that illustrate the need for implementation of BCP will include major shutdown of all but necessary banking transactions as a result of COVID-19 ( a disease caused by Severe Acute Respiratory Syndrome  scientifically known as SARS-COV-2),the pandemic has been equated to a black swan event  on par with financial devastation  caused by the1920`s economic depression (Nicola et al.,2020).Barclays are implementing BCP by rolling out decentralised banking infrastructure using API (Application programming interface) exchange in line with security business continuity management systems formally known as ISO 223-1:2012 (ISO)international organisation for standardisation. API technology used by both Barclays customers is similar to the same technology used by fintech start-ups such as PayPal, Barclays are attempting to manage both short- and long-term threats to its business model. Barclays boasts successful implementation of business continuity practises, according to the quarter 3 investors call Barclays has enabled 65,000 of its employees to work from home negating the demand and strain on work premises caused by COVID-19.In addition to this using API Barclays has enabled 640,000 payment Holidays globally equating to helping businesses raise £1 trillion in the capital markets, 25billion of which came from The United kingdom’s government support schemes. (Barclays financial results for Q3 2020, 2021),based on the Basel 3 global banking  directives Barclays successfully implement edit's emergency business continuity plans.

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Business continuity practises will vary depending on location, the nature of this variation can be seen in the Bank of Japan’s response to the 2011 Fukushima earthquake and tsunami. Due to those variations in conditions banking sectors in different countries will have to have appropriate proportional responses to the situations at hand, as illustrated by the Bank of Japan’s response (Wearden, 2011). As stated by CRS report Japan lost $305 billion in national assets and infrastructure. Furthermore, 23,000 people are believed to have been killed or missing. (Japan’s 2011Earthquake and Tsunami: Economic Effects and Implications for the United States, 2021) Due to the high probability of seismic activity ,caused by the fact that japan lies on the Itoigawa-Shizuoka Tectonic Line Japan is defined as an disaster prone area (Ogawa and Honkura, 2004).  Hannabuss (2016) describes a loss ofaccess is a physical disruption in which personnel are denied access to work premises, this could be due to an earthquake that damages the property and compromises site safety. Under the Bank of Japan’s business continuity practices response a 2011 this is categorized under an external response matrix, in practise this stipulates the supply of cash to financial institutions.

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Bank branches in Tohoku region in northern Japan supplied310 billion yen to institutions in the region. (Payment and Settlement Systems Department, Bank of Japan, p5, 201). Noting the successful implementation of BCP, On Monday, March 14, the Bank issued cash tallying 21.8 trillion yen viafunds-supplying operations. Achieved a history high and was thrice the full daily liquidity tendered throughout the fiscal crunch following the collapse of Lehman Brothers in fall 2008.Thisindicates that the Bank of Japan has good core capitalization principles holding excess liquidity for emergencies. Asa direct result of these endeavors, on the day of the earthquake, all transactions over the BOJ-NET were completed at the normal scheduled times.

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According to temporary legislation measures based on Article 27 of the Electricity Business Act, electricity restrictions were. Applied to large-scale consumers of electricity from 2011 summer. Customers were required to maintain their electricity use through peak periods at a 15 percent deficit when contrasted to their highest level used in the same period of the prior year. (Payment and Settlement Systems Department, Bank of Japan, p30, 2011).In retrospect the Bank of Japan and all financial organizations need to continually review the seriousness and extent of the circumstances utilized in planning their business continuity. Arrangements,thesescenarios responses are typically developed based on destruction scenarios considering limitations on the availability of facilities and equipment such as offices, and computer centres. To be better prepared all financial institutions must account for scenarios that exceed the current damage scenarios due to the probability of natural disasters. (Payment and Settlement Systems Department, Bank of Japan, p28, 2011).

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Since events and situations vary globally it is difficult to stipulate a global BCP guideline. Different proportional responses are required to meet the demands of the situation. In this scenario, the Bank of Japan’s response to the 2011 Fukushima earthquake was exemplary but it is important to note that because global circumstances require different responses there still is room to improve and consolidate BCP guidelines for the banking industry.  

As with all businesses banks depend on supplies this includes deposition of cash amongst other supplies (Hannabuss, 2016),the loss of supplies is detrimental to service provision this may occur due to adverse weather conditions such as storms or hurricanes leading to failures in supply chains. Disruptions to loss of supply, February 2021 25 US states saw 4.7 million Americans plunged into frigid weather conditions leading to a 50% loss in power supply, equation to four million barrels per day of crude oil production being stopped. With trading entities such Macquariean Australian bank holding considerable assets values at234 million US dollars in such markets it is important to note that there would have been losses and profits in such a scenario. (Electric Power ESG, 2021). As stated by the Volcker rule, bank investments are regulated and cannot invest in speculative trading, in addition banks are not allowed to be in business with private equity firms considered too risky or too big to fail. Similarly, in February 2011 Texas and Arizona Experienced a similar set of circumstances which led to downtime with the power grid, authorities were prompted to warn power providers to bolster their services (Christian,Hale and Potter, 2021). Based on the above statement it can be inferred that banks trading in Texas and Arizona privately held companies’ stocks were in breach of the Basel 3 framework rules set out to prevent banks from holding equity firms considered too risky oh big to fail in this case. This can be solely considered a failure of business continuity practises.

Conclusion

Protracted business continuity in the banking sector by most accounts has been inconsistent in making efforts mildly ineffective at reducing difficulties caused by economic challenges (Cuadrado-Roura etal., 2013).Business Continuity has been defined as the ability of an organization to ensure continuation of major operations and business (Hannabuss, 2016).Bank’s Trading in Texas and Arizona privately held companies’ stocks were in violation of the Basel 3 framework rules set out to prevent banks from holding equity firms considered too risky or big to fail in this case. This can be exclusively considered a failure of business continuity practises in American banking industry.Scenario responses are typically developed based on destruction scenarios simulation studying limitations of facilities and equipment.To be better prepared in the future all financial institutions must account for scenarios that exceed their current damage scenario simulation (Payment and Settlement Systems Department, Bank of Japan, p28, 2011).Circumstances fluctuate worldwide it is challenging to specify a global BC guideline perhaps a fundamental change in global banking philosophy may enable a more resilient global economy. Proportional responses are required by law to meet the demands of the situation. The Bank of Japan’s response to the 2011Fukushima earthquake was exemplary. Dueto the frequency of economic challenges caused by inexplicable events or disasters I can say with certainty that global business continuity practices are improving but at a sluggish pace.(Rezai, 2019)

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