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6 Actionable Steps for Operational Resilience in financial services

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The capability of a financial organisation to endure and adjust to disturbances, such as cyber-attacks, natural catastrophes, and other unforeseen events, is known as operational resilience in the financial services industry. Operational resilience has become crucial to any financial institution’s risk management plan in the digital age. This blog looks at how financial organisations can strengthen their organisational resilience.

Financial institutions must take six measures to detect and defend themselves from threats and possible failures and react to, adjust to, and recover from disruptive events. 

1. Identify and assess risks

The first stage is to find possible risks affecting your operations. Assessing the probability and impact of different scenarios, including cyber-attacks, natural catastrophes, and other unforeseen occurrences, is part of this process. Conduct a risk assessment to identify these risks and their possible effect on your company.

Conducting a threat evaluation is one approach to finding possible risks. This requires analysing the probability and effects of various scenarios that compromise customer information or interfere with company processes. Financial organisations can better comprehend the possible effect on their operations and take action to minimise it by recognising these risks.

2. Develop a business continuity plan

In the event of a disruption, your business’s operations are outlined in a business continuity strategy. Critical business tasks, recovery time goals, and important employees in charge of carrying out the strategy should all be identified in this document. To make sure the strategy stays effective, make sure it is frequently revised and tested.

The company continuity plan must be reviewed and updated frequently to stay successful. This includes assessing the strategy to find any holes or weak points and making the required corrections. Financial organisations ought to think about forming a crisis management squad that would be in charge of monitoring the execution of the backup plan in the event of a disruption.

3. Invest in technology

Technology can significantly enhance organisational reliability. Cyber-attacks can be defended by implementing cybersecurity means like firewalls, encryption, and multi-factor identification. In the event of a catastrophe, cloud computing and online access options can also aid in ensuring company survival.

Cloud computing and remote access solutions can also help ensure business continuity. Financial institutions can obtain critical data and applications from any place using cloud-based technology, enabling them to carry on with business even if their actual address is compromised.

4. Implement strong governance and supervision

To ensure practical reliability, governance and monitoring are essential. Key personnel should clearly define their duties and obligations, and their skills and knowledge should be up to par. To make sure that policies and processes are still effective, examine and update them frequently.

To make sure they continue to be successful, policies and procedures should be routinely evaluated and updated. To find any gaps or deficiencies in their risk management procedures, financial institutions should perform routine audits and assessments.

5. Defining and practising communications plans

Defining and practising messaging plans and processes for service disruption recovery is critical to operational resilience and should include surge capacity planning, partner service-dependency mapping, and consumer redress.

Furthermore, straightforward communication necessitates the sharing of comprehensive knowledge about technology assets and the services they support. Automated tools for improving business awareness ensure that information is collected and displayed methodically and uniformly. Firms should consider intelligent, automatic processes to reduce inefficiencies and security flaws that hinder resilience in order to promote adjacencies and enhance operational resilience.

6. Understand Upstream and Downstream Dependencies

Companies today work in a fast-paced environment. Creating a data structure to map the people, processes, systems, and third parties needed to perform the business service is a critical stage in understanding the dependencies. Understanding internal and external links and points of view is critical to developing company resilience, ensuring the complete image is current and all changes are pertinent.

Because organisations are becoming more reliant on third-party suppliers and outsourcing of some tasks, such a strategy can assist in navigating the risks posed by third and fourth parties. Assure the organisation’s strategy to third and fourth-party suppliers is risk-based and proportionate. To fulfil their obligations, they must examine their activities’ character, size, and complexity. Firms that use these suppliers must take reasonable precautions to organise and regulate their affairs responsibly and efficiently, with appropriate risk management systems in place.

By taking these actionable steps, you can improve operational resilience in financial services, ensuring your organisation is better prepared to withstand and adapt to disruptions.

In addition to these actionable measures, financial organisations can improve their operational resilience by leveraging industry norms and guidelines. The Financial Stability Board (FSB), for example, has created a set of principles for operational resilience in the financial industry that offers guidance on how to manage operational risk successfully.

The principles of the FSB emphasise the significance of risk identification and assessment, creating a business survival plan, engaging in technology, and having strong control and supervision. Financial organisations can enhance their operational resilience and risk management by adhering to these concepts.

Improving organisational resilience also requires cultivating a resilient mindset. This includes raising the consciousness of possible risks and emphasising the significance of preparation, as well as providing workers with training and support to help them develop the skills and knowledge required to react effectively to disturbances.
Lastly, organisational resilience is critical to any financial institution’s risk management plan. Financial organisations must take action to spot and evaluate risks and create a company continuity strategy.

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