other ecosystem participants must have robust disaster recovery and business continuity plans in place and test them periodically. further, it infrastructure and channels have to be protected from the emerging cyber threats to ensure operational resilience. i would therefore like to reiterate that the boards and it strategy committees of the banks need to step up their oversight in this matter. outsourcing risks a€ “ managing third party dependencies while we acknowledge the numerous advantages that outsourcing can offer to a bank, such as cost savings and increased efficiencies, it is crucial for banks to maintain vigilance regarding the accompanying risks. these risks include the potential loss of control over critical operations, the risk of data security breaches, heightened dependency on third - party providers, and the possibility of reputation damage stemming from the misconduct of service providers. as the rbi has time and again reiterated, outsourcing does not absolve a bank of any of its obligations and they continue to remain ultimately responsible for the activities of their service providers including recovery agents. banks must ensure that their service providers employ the same high standard of care in performing the services as would be employed by the banks. banks should not engage in any outsourcing that may result in their internal control, business conduct or reputation being compromised or weakened. 3 / 5 bis - central bankers'speeches climate risk it also needs to be appreciated that we are living in an era when climate change and its consequent risks cannot be ignored. due to its geographic, environmental and economic characteristics india is particularly vulnerable to climate change. variability in monsoon patterns coupled with temperature change impact crop production and affect our food security. apart from agriculture, even in other sectors the economic impact of climate change in india could be substantial. climate - related financial risks pose both micro and macro - prudential concerns. climate change risk is ascending the hierarchy of threats to financial stability across advanced and emerging economies alike and consequently, the need for an appropriate framework to identify, assess and manage climate - related risk has become imperative. customer protection lastly, and perhaps most importantly, i would like to discuss the aspect of customer protection which is integral to building a resilient brand india in many ways. financial services institutions exist because of their customers. they entrust regulated entities with their hard - earned money, their dreams, and their aspirations. therefore, customer protection and timely grievance redressal, forms the foundation of trust and reliability, contributing to the overall resilience and reputation of

presently enjoying may not be sustained in the future when the interest rate cycle reverses, whenever that happens in future. external benchmark linked loans will be repriced much faster than deposits contracted during the peak of the interest rate cycle resulting in pressure on nims and eventually profitability. therefore, apart from interest rate risk in the trading book, banks must be mindful of the interest rate risk in the banking book as well. on the liabilities side, banks must endeavour to proactively manage the pricing and duration of their deposits while trying to diversify the sources and optimising the product mix of deposits. excessive reliance on bulk deposits should be avoided as these are more sensitive to interest rate movements and perpetuate concentration risk while also eroding earnings. business models 2 / 5 bis - central bankers'speeches as recent global events have demonstrated, sometimes, even business models once perceived as safe can fail. therefore, banks need to remain alert to the risks inherent in their business models and mitigate them in a timely manner. in good times like this, financial institutions must review their growth plans while putting in place adequate risk management systems to handle the emerging risks. it is imperative for boards of banks and nbfcs to fix suitable sectoral and sub sectoral exposure limits and monitor them closely to avoid any sectoral concentration, adverse selection or dilution of underwriting standards. the growing collaboration between banks, nbfcs, and fintechs is driving innovation in products, services, and business models. an important consideration is the cautious adoption of model - based lending through analytics. banks and nbfcs should exercise caution in relying solely on preset algorithms, ensuring that these models are robust, regularly tested, and recalibrated as needed to maintain robust underwriting standards. operational resilience in view of the ever - increasing adoption and usage of digital channels by members of public, it has become imperative for banks and payment system participants to ensure uninterrupted availability of various online and mobile banking channels at all times. recently, there have been a few incidents of unscheduled downtimes inconveniencing several customers. it is also observed that many banks have not been spending fully, the budget earmarked for procurement of it systems and it security systems. banks have to proactively commit adequate resources for augmenting their it infrastructure, commensurate with their business plans and also monitor them for their continued availability and stability. banks and