[OR] [P2] [S2] [MII] [C1] Introduction to Interconnections and Interdependencies

[P2] [S2] Chapter 1

Introduction to Interconnections and Interdependencies

Introduction

Operational resilience has evolved beyond traditional risk management and business continuity practices, focusing on an organisation’s ability to deliver critical services amid disruption.

At the heart of this capability lies a fundamental requirement: understanding how different components of the organisation are connected and interdependent.

This is where mapping interconnections and interdependencies becomes essential.

Modern organisations—particularly financial institutions—operate within highly complex ecosystems. These ecosystems span internal functions, technology platforms, third-party providers, and cross-border infrastructures.

Disruptions rarely occur in isolation; instead, they propagate through interconnected systems, often leading to cascading failures.

Without a clear understanding of these relationships, organisations cannot effectively anticipate, withstand, or recover from disruptions.

This chapter introduces the foundational concepts of interconnections and interdependencies, explains their role in operational resilience, and establishes their critical linkage to Critical Business Services (CBS).

It also highlights the importance of adopting a service-centric perspective, which is a key principle underpinning modern regulatory expectations and operational resilience frameworks.

Purpose of the Chapter

The purpose of this chapter is to:

• Define interconnections and interdependencies in the context of operational resilience
• Explain their strategic and operational importance
• Establish their linkage to Critical Business Services (CBS)
• Introduce the shift from a process-centric to a service-centric approach in resilience planning

Definition of Interconnections and Interdependencies

Interconnections

Interconnections refer to the linkages and interactions between various components within an organisation or across external entities.

These connections describe how different elements communicate, exchange data, or rely on each other to function effectively.

Examples include:

• Integration between core banking systems and payment platforms
• Data flows between front-end customer channels and backend processing systems
• Communication links between operational teams and third-party service providers

Interdependencies

Interdependencies refer to the mutual reliance among interconnected components, in which the functioning of one element depends on the availability or performance of another.

These dependencies can exist across multiple dimensions:

• People: Key personnel, subject matter experts
• Processes: Operational workflows and procedures
• Technology: Applications, infrastructure, networks
• Facilities: Physical locations and data centres
• Third Parties: Vendors, outsourcing partners, service providers

Key Distinction

• Interconnections describe how components are linked
• Interdependencies describe how components rely on each other

Together, they form a networked ecosystem that supports the delivery of business services.

Role in Operational Resilience

Understanding interconnections and interdependencies is central to achieving operational resilience. It enables organisations to move beyond siloed views of risk and develop a holistic understanding of service delivery.

Enhancing Visibility of Risk

Mapping interconnections provides visibility into:

• Hidden dependencies
• Concentration risks
• Single points of failure

This visibility allows organisations to proactively identify vulnerabilities before disruptions occur.

Understanding Cascading Impacts

Disruptions in one component can trigger chain reactions across interconnected systems. For example:

• A technology outage may impact multiple business processes
• A third-party failure may disrupt several critical services simultaneously

Interdependency mapping helps organisations understand:

• Upstream impacts (what feeds into a process)
• Downstream impacts (what is affected when a process fails)

Supporting Resilience Decision-Making

By understanding interdependencies, organisations can:

• Prioritise critical resources
• Allocate investments effectively
• Design targeted recovery strategies

Enabling Scenario Testing

Interconnections and interdependencies form the foundation for:

• Severe but plausible scenario design
• End-to-end service testing
• Impact tolerance validation

Without accurate mapping, scenario testing becomes superficial and fails to reflect real-world complexities.

Link to Critical Business Services (CBS)

Operational resilience frameworks emphasise the identification and protection of Critical Business Services (CBS)—the services that, if disrupted, would cause intolerable harm to customers, the organisation, or the broader financial system.

CBS as the Anchor Point

Interconnection mapping is anchored on CBS, not individual processes or systems. This ensures that resilience efforts are aligned with:

• Customer outcomes
• Regulatory expectations
• Systemic importance

Mapping End-to-End Service Delivery

For each CBS, organisations must map:

• All supporting processes
• All enabling resources
• All internal and external dependencies

This creates a complete view of how the service is delivered from initiation to completion.

Supporting Key Resilience Activities

Interconnections and interdependencies mapping directly support:

• Impact Tolerance Setting: Identifying the maximum acceptable disruption
• Scenario Testing: Assessing resilience under stress conditions
• Business Continuity Planning: Designing recovery strategies

Example

For a CBS such as Payments and Funds Transfer Services, mapping would include:

• Customer initiation channels (mobile, internet banking)
• Authentication systems
• Payment processing engines
• Clearing and settlement networks
• Third-party payment gateways

Each of these components is interconnected and interdependent, forming the service delivery chain.

Importance of a Service-Centric vs Process-Centric View

Traditional Process-Centric Approach

Historically, organisations focused on:

• Individual processes
• Departmental functions
• System-level recovery

This approach often resulted in:

• Fragmented understanding
• Siloed risk management
• Gaps in end-to-end resilience

Service-Centric Approach

Operational resilience requires a shift to a service-centric perspective, where the focus is on:

• End-to-end delivery of services
• Customer and stakeholder outcomes
• Integrated cross-functional dependencies

Key Differences

Why the Shift is Critical

A service-centric approach ensures that:

• Critical services remain available even if individual components fail
• Dependencies across functions and entities are fully understood
• Resilience strategies are aligned with real-world service delivery

This aligns with regulatory expectations that organisations must demonstrate the ability to deliver critical services under disruption, rather than simply recover individual systems or processes.

Interconnections and interdependencies form the foundation of operational resilience. They provide the visibility and understanding required to manage complexity, anticipate disruptions, and ensure continuity of critical services.

By defining how components are linked and how they depend on one another, organisations can shift from reactive recovery planning to proactive resilience management.

This capability is essential in today’s interconnected environment, where disruptions can rapidly cascade across systems, functions, and external partners.

Most importantly, this chapter establishes the need for a service-centric approach, anchored on Critical Business Services.

This perspective ensures that resilience efforts are aligned with what truly matters—the sustained delivery of services to customers and stakeholders.

In the following chapters, we will build on these foundations by exploring the methodologies, tools, and practical steps required to map interconnections and interdependencies effectively, in alignment with the Operational Resilience Planning Methodology (OR-P2-S2).

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