Operational resilience

Firms have long been operating in an environment of interconnected and overlapping crisis. To survive and thrive, the most valuable currency for firms is the trust of their stakeholders - be it regulators, investors, customers, suppliers, or employees.

The question firms need to ask themselves is not “if” but “when” will the next crisis strike? And when it does – will they be prepared to remain worthy of their stakeholders’ trust?

Firms have a tremendous opportunity to build this trustworthiness by demonstrating their ability to remain operationally resilient and bounce back stronger through any crisis or disruption.

Firms that recognise this opportunity and invest in building a strategic operational resilience capability will gain a significant competitive advantage enabling them to capitalise on opportunities where their competitors may be less prepared.

It’s a very exciting time to be sat at the heart of operational resilience, and the next few years promise to inculcate a feeling of permanent dynamism. Now is the time to invest in and prepare for the future.

Beyond recovery to mitigating external harm

Financial services firms have long engaged in various forms of testing to ensure business continuity management (BCM). Whilst (BCM), IT disaster recovery (ITDR), and crisis management testing all provide valuable insights into a firm’s internal recoverability, the emergence of Operational Resilience regulations across a number of jurisdictions highlights the need for a complementary approach to traditional BC and ITDR exercises.

Firms must now consider how they will conduct scenario testing to mitigate external harm, with a specific focus on the potential disruption caused to customers and wider market from severe but plausible scenarios. Moreover, many firms have received feedback that they must make their scenario testing more complex and severe, which necessitates the requirement for them to move from traditional desktop testing to live testing.

We have found that this cultural shift requires tooling to facilitate focused testing.Platforms such as Fusion’s scenario testing capability can help firms leverage data science and artificial intelligence (AI) to identify potential areas of concern, prioritise these, and conduct targeted testing which has been informed by data-driven insights.

At the time of writing, specific financial services operational resilience regulation has not been formally released by the Central Bank of the UAE (CBUAE), however, this is expected and many organisations are rightly preparing for it.

Actionable approaches to build and operationalise a sustainable Operational Resilience capability

Accountability and clear tone from the top

Boards need to take ultimate accountability for resilience as a strategic business imperative. This accountability shouldn’t be diluted by delegation to complex risk and governance structures. Leaders need to be vocal and empower the organisation to take resilience-led decisions and demand metrics that are forward looking e.g. recovery rate of services vis-à-vis competition.
A mindset shift that puts resilience at the heart of everything

Nothing changes until mindsets change. Boards and C-suite executives need to drive this narrative into the heart of the organisation. They need to incentivise bringing together complimentary capabilities like operational risk management, business continuity management, IT and cyber risk management, third party risk management etc. to achieve the resilience imperative. The traditional inward facing view of the organisation is no longer fit for purpose and needs to pivot to a customer-led service delivery view. The executive focus also needs to put resilience by design at the centre of their strategic business decision making process
Pivot from a cost narrative to a return-oninvestment narrative

The cost of not being resilient is simple – you may no longer be in business. This hard-hitting reality is what needs coming to terms with. Instead of thinking how much a resilience initiative will cost, the pivot needs to be how much return this investment will generate in the form of increased market share and client retention by making services more reliable.