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OCT 21, 2021

Operational Resilience: is the UK financial sector ready?

Alessandro Rocco

Marketing & Communication Specialist

Reading time: 2 min


31ST March 2022

Operational Resilience’s first deadline is approaching fast. By that date, the UK financial sector and all the firms designated by the authorities must have concluded their implementation phase and drafted a plan for the upcoming 3 years. The aim of this regulation is to ensure that the sector is able to prevent, adapt, respond to, recover and learn from operational disruptions, setting a minimum standard to which the final customers are not negatively impacted by service interruption.

The Background

The regulation has been issued by the Bank of England, together with the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). The discussion started in 2018 and this year they have released the policy statement and all the rules that firms have to follow in order to comply to this new regulation. What has brought the authorities to issue this regulation is the “unsecure” environment in which the financial sector operates. Unsecure in terms of the inability of firms to react to sudden, unexpected and unpredictable events. Such as a pandemic. Not being able to react properly to such events could led to failure in services and accessibility for customers to their accounts. Clients would not be protected and the overall market can suffer from this instability.

Entities involved

The authorities have identified a set of firms that will be affected by this regulation, and it comprises:

  • Enhanced Scope Senior Managers’ and Certification Regime (SM&CR)
  • Banks
  • Insurers
  • Banks
  • Designated investment firms
  • Insurers
  • Recognised Investment Exchanges
  • Building societies
  • Firms authorised under the PSRs 2017 or EMRs 2011

If your firm is among these, you should be preparing your draft plan to ensure the resilience of your firm in adverse moments.

Next steps

In order to comply to the regulation, firms must draft the implementation plan that will be validated during the second phase of the Operational Resilience, that will come into force on 1st April 2022 and will last 3 years, ending on 31st March 2025.
To draft the plan, firms have to detect their Important Business Services (IBS), map all of these and set thresholds in which firms will be able to react and restore their IBS, to ensure operability to their customers.
Setting the thresholds will help firms measuring and estimating their ability to respond to many different scenarios that might hit and impact their businesses. This 3-year span time would give firms the possibility to test their systems and their ability to react, to be resilient, and update in case of necessity their thresholds or systems. In fact, once the Implementation Phase is over, hence starting 1st April 2025, firms must guarantee that the thresholds set can be met.

So, are you ready for Operational Resilience?
Soon, we will launch a survey to investigate the state of the market. Get ready to respond! You will receive a vademecum on Operational Resilience and all its details to help you meet the goals.