A Batch Job scope has five batch steps.

In case of an error , batch job completes in flight steps and stops further processing.

MuleSoft Doc Ref : Handling Errors During Batch Job | MuleSoft Documentation

The default is all processing will stop but we can change it by Max Failed Record field.

General -> Max Failed Records: Mule has three options for handling a record-level error: Finish processing, Continue processing and Continue processing until the batch job accumulates a maximum number of failed records. This behavior can be controlled by Max Failed Records.

The default value is Zero which corresponds to Finish processing.

The value -1, corresponds to Continue processing.

The value +ve integer, corresponds to Continue processing until the batch job accumulates a maximum number of failed records