All payment systems typically would be subject to two major risks – Financial Risk pertaining to settlement and Operational Risk from Business Continuity context.
Due to settlement being completed through participant accounts in Central Bank or in ‘central-bank money’ the settlement bank risk is totally eliminated. To manage counterparty/liquidity risk, the intra-day liquidity support from CBO, queue management and gridlock resolutions have been put in place. With regards to deferred net settlement systems like in ACH and ECC, the participant-wise net debit caps have been placed.
Operational Risk is contained at various levels. The systems have been built using “no-single point” failure designs. These include cluster technology at processing servers, disk mirroring at data storage level, load balancing and redundancy at gate-way level and in the LAN. The risk containment is further strengthened through periodic data backup as per standard procedures and availability of a hot standby Disaster Recovery Site which is tested from time to time.
The Principles for Financial Market Infrastructure (PFMI) are the minimum benchmarks which CBO follows for managing the risks. The payment systems are also subjected to assessment from time to time by International Monetary Fund (IMF) under its Financial Sector Assessment Programme or GCC sponsored IMF Assessment.