The Changing Face of Operational Resilience: A Growing Focus and the Demand for Operational Resilience Leaders
In the fast-paced and interconnected world of finance, operational resilience has emerged as a critical aspect of risk management. With financial regulators such as the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) placing increasing emphasis on operational resilience, financial institutions are witnessing a significant transformation in their risk functions. This blog explores the evolving landscape of operational resilience, the demand for leaders in this field, and the growing importance of building dedicated operational resilience teams within risk functions.
Operational Resilience: A New Paradigm
Operational resilience refers to an organization’s ability to withstand and rapidly recover from operational disruptions, ensuring the continuity of critical business operations and safeguarding the interests of customers and stakeholders. Traditionally, risk management focused on operational risk with business continuity planning being a small part of this with support from colleagues in IT or operations. However, recent regulatory changes and a surge in cyber threats have prompted financial institutions to broaden their risk outlook to enhance their operational resilience.
Regulatory Changes and the Focal Shift
In light of several high-profile operational disruptions and cyber incidents in the financial sector, regulators have recognized the urgency of strengthening operational resilience. The PRA and the FCA have released joint policy statements and consultation papers outlining their expectations on operational resilience frameworks. Institutions are now required to identify their most important business services, set impact tolerances for disruptions, and develop comprehensive response plans, with a focus on customer impact.
Growing Demand for Head of Operational Resilience
The heightened focus on operational resilience has created a surge in demand for experienced professionals who can spearhead this critical function. The position of “Head of Operational Resilience” has emerged as a senior leadership role within the risk function. This individual is responsible for designing, implementing, and testing operational resilience strategies and ensuring compliance with regulatory requirements.
Skills and Qualities Required
As operational resilience gains prominence, organisations seek leaders with a unique blend of skills and qualities. The Head of Operational Resilience must possess a deep understanding of the organisation’s business operations, technology infrastructure, and potential vulnerabilities. Strong analytical capabilities, crisis management skills, and the ability to collaborate across departments are essential for success in this role.
Building Dedicated Operational Resilience Teams
To address the complexity of operational resilience, financial institutions are creating dedicated operational resilience teams within their risk functions. These teams collaborate closely with business units, IT departments, and compliance to embed resilience principles into the organization’s culture. The operational resilience team plays a pivotal role in conducting impact assessments, stress testing, and scenario analysis to identify potential risks and strengthen the organization’s response capabilities.
Collaboration with IT and Cybersecurity
As technology continues to drive innovations in financial services, the collaboration between the operational resilience function and IT and cybersecurity teams has become imperative. Cyber threats and technology failures are significant sources of operational risk. Aligning operational resilience efforts with robust cybersecurity measures ensures a comprehensive approach to mitigating risks across the organization.
Conclusion
The changing face of operational resilience has become a defining characteristic of modern risk management in the financial sector. Regulatory changes, growing cyber threats, and the need to maintain seamless business operations have elevated operational resilience to a top priority for financial institutions. The demand for skilled leaders, such as the Head of Operational Resilience, underscores the criticality of this function within the risk management framework.
In the pursuit of operational resilience excellence, financial institutions must build dedicated operational resilience teams and foster collaboration with IT and cybersecurity departments. By embedding a culture of resilience and continually enhancing response capabilities, organizations can navigate operational challenges with confidence and emerge stronger in an ever-evolving financial landscape. Embracing the changing face of operational resilience is not just a regulatory obligation; it is a strategic imperative for future success.
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