There should be a policy and procedure in place to manage the risks. Internal control: The financial institutions should set up preventive, detective and corrective control mechanisms that may be built in the operating procedure or programmed in the system involving new product and service delivery. Contingency plan: The financial institutions should formulate the contingency plan to carry on the business under unexpected events. Staff development: The financial institutions should establish a staff development plan to enhance personnel capabilities to conduct new product and service operations. Last topic of presentation is new challenges for BOT supervision and ways to overcome. 5. New challenges for BOT's IT supervision and ways to overcome  (1)  While the financial industry is moving fast with innovations and new developments, supervision needs to ensure the stability of the financial system. Supervisors need to encourage financial institutions to operate their businesses in a safe and sound manner as new delivery channels or services could exacerbate some of the same risks inherent in traditional banking. However, the prudential regulatory framework has to be congruent to the evolution of the e-banking business. Therefore, we need to strike a balance between the need to maintain the stability of the financial system and to foster developments, competition, and a level playing field. There are ways to overcome this challenge. BIS Review 35/2005  7  -  Regulators need to keep up with the development of the market while being proactive in formulating the regulatory framework.

We anticipate a financial institution's policy to cover all necessary areas pertaining to IT activities including contingency plan, security, and out/in-sourcing. In addition, the policy should cover new product issuance such as internet banking and e-money. The process of formulating, implementing and maintaining of such policies should be considered. A continuous risk assessment and monitoring should also be part of an area of examination. Management support and oversight It is ultimately a responsibility of a financial institution's board and management to extend governance to IT and provide the leadership, organizational structures and processes to direct and control the enterprise. Management must monitor to ensure that IT resources are properly managed to promote business objectives. 4  BIS Review 35/2005  IT governance During the last few years, financial institutions have increasingly invested in technology infrastructure to improve their internal processes and servicing capabilities. Investment in technology infrastructure normally involves huge amount of funds and other resources. Technology also carries risks, which can adversely affect financial institutions if not properly managed. Financial institutions need to understand the strategic importance of IT, manage IT to effectively deliver value to business, and mitigate risks arisen from the use of IT. IT governance focuses on how financial institutions make the best use of their invested technologies. It is a high-level IT control framework related to the formulation of IT strategies, the management of IT processes to deliver value, the performance measurement, and the management of IT-related risks.