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Building Operational Resilience: are you ready?

Alexander Cassar

CBOO at Objectway


Audio Transcript

Why do we consider Operational Resilience critically important and are discussing it in this series? There is a lot of talk about it in the last couple of years, and many people associate it with the disruptions caused by the COVID pandemic – but focus on resilience dates back from the big financial crisis of 2008. It was clear that the financial system needs to ensure stability in the face of severe disruptions, and various bodies started addressing the challenge.

The Basel Committee on Baking Supervision provided the definition of Operational Resilience: “The ability of a bank to deliver critical operations through disruption. Tolerance for disruption is further defined as: the level of disruption from any type of operational risk a bank is willing to accept, given a range of severe but plausible scenarios.

Note that it’s not the same as Risk Management, where negative events are considered as a probability. Operational Resilience assumes with certainty that disruptions will happen and bases the response on that certainty.

In the UK the FCA, as well as the PRA and the Bank of England have made Operational Resilience a high priority and since 2018 have done significant consultation and regulatory work. In the Policy Summary published earlier this year, it is mandated that by 31st March 2022 all financial institutions and market infrastructure providers must:

  • Identify their important business services by considering how disruption to the business service they provide can have impacts beyond their own commercial interests.
  • Set a tolerance for disruption for each important business service.
  • Ensure they can continue to deliver their important business services – and are able to remain within their impact tolerances – during severe (or in the case of FMIs, extreme) but plausible scenarios.

It is challenging for any organisation to build and understand a complete picture of possible disruptive events and their negative business impact, let alone the capabilities needed to recover and minimise the damage form failures.

Disruptions can be of various nature: cyber-attacks, war and terrorism, natural disasters (including devastating health pandemics). The common thread between them is the increased vulnerability resulting from the digital interconnectedness of the Financial Services sector. Hence the focus on Technology.
As an experienced and reliable banking and wealthtech provider, Objectway has embedded all necessary functionality and capabilities to support client organisations in addressing the mentioned challenges.

One example is our response to disruption in the early days of the COVID pandemic – when Wealth Management was paralysed by losing the traditional face-to-face interaction of clients with advisors and relationship managers. Objectway rapidly promoted to stakeholders relevant existing functionalities (and deployed new ones) for secure omnichannel interaction, access to reports and portfolios, and dialogue with advisors in rich audio-visual format.

To learn more about Operational Resilience and how we can support clients with it, follow the podcast series in the following weeks, to hear from leading experts on different aspects of the subject.