In today's rapidly evolving financial landscape, operational resilience has emerged as a critical factor in ensuring financial institutions' continued success and sustainability.
As businesses grapple with increasing complexity, regulatory pressures, and emerging threats, the ability to withstand disruptions and deliver seamless services to clients has become paramount.
Operational resilience can be defined as the ability of an organisation to maintain essential functions and services during and after a disruptive event.
It involves a proactive approach to identifying, assessing, and mitigating risks that could impact the delivery of services to clients. By prioritising operational resilience, financial institutions can:
Several factors have contributed to the increased emphasis on operational resilience in recent years:
To effectively address the challenges of operational resilience, financial institutions should implement a comprehensive approach that includes:
Note from Moderator: The speaker mentioned several concepts, but she could not elaborate due to time constraints. Click the icon on the right, "Related OR Concepts," to view the many terminologies used while implementing and sustaining the Operational Resilience Program.
This is part of the course curriculum for the Operational Resilience Expert Implementer or OR-5000 course she attended.
Operational resilience is no longer a luxury but necessary for financial institutions operating in today's dynamic environment.
By prioritising operational resilience, firms can protect their clients' interests, enhance their reputation, and strengthen their competitive position. As the risks and challenges facing the financial industry continue to evolve, the importance of operational resilience will only grow.
The pursuit of operational resilience, the ability to deliver critical services even during disruptions, presents a complex challenge for multinational companies. Regulatory landscapes vary significantly across the globe, making it difficult to achieve a uniform approach.
This article explores the current regulatory environment for operational resilience, highlighting the diverse requirements of different regions. We will examine the regulations of the European Union, the United Kingdom, the United States, and key Asian markets like Hong Kong and Singapore.
As companies operate across borders, they must navigate a patchwork of regulations. The European Union's Digital Operational Resilience Act (DORA) focuses on critical service mapping, ICT risk management, and incident reporting. In contrast, the UK's Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) prioritise identifying critical business services and scenario testing. The US focuses on recovering from disruptions caused by cyber threats and third-party reliance.
This divergence creates confusion for companies seeking a consistent approach. The key lies in understanding one's headquarters location and prioritising applicable regulations. However, global companies must still address additional requirements in other regions.
Implementing operational resilience across a global organisation presents a multifaceted challenge. This article examines the key factors that can hinder successful implementation, including:
Retail banking and wholesale banking have distinct operational characteristics. Retail banks typically serve individual customers, while wholesale banks focus on institutional clients. These differences necessitate tailored approaches to operational resilience.
Each jurisdiction has its own legal framework and regulatory oversight. Compliance with these requirements is essential for ensuring operational resilience. Organisations must stay informed about local regulations and adapt their strategies accordingly.
Larger organisations with diverse business lines face unique challenges. They must develop scalable frameworks that can accommodate different operational needs and complexities.
Cross-cultural communication and collaboration can be complex. Organisations must foster understanding and respect for cultural perspectives to ensure effective teamwork and decision-making.
Outsourcing strategies must consider local market conditions and regulatory requirements. Organisations should carefully evaluate options to align with their operational resilience objectives.
Variations in technology infrastructure can impact operational resilience. Organisations must ensure their technology aligns with their resilience goals and local requirements.
Relying on centralised systems can create challenges for regional entities. Organisations should consider decentralising certain functions to reduce dependencies and enhance resilience.
Unexpected disruptions can occur at any time. Organisations must develop contingency plans to mitigate the impact of unforeseen events and ensure business continuity.
If you have any questions, email the moderator, Dr Goh Moh Heng, with your comments.
Click the icon on the right for the additional questions asked by the participants, but due to a shortage of time, Dr Goh provides the answers.
Click the icon on the left to continue reading Part 2 of Veronika's presentation.
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