[OR] [P1-S3] Develop Operational Resilience Framework

Develop an Operational Resilience Framework

An operational resilience framework is a structured, organisation-wide strategy designed to ensure a financial institution can prepare for, adapt to, respond to, and recover from operational disruptions while maintaining the continuity of critical business services (CBS).

It protects customers, employees, markets, and the broader financial system from harm, even during severe events like cyberattacks, IT failures, natural disasters, or third-party outages.

Core Objectives

Identify and protect critical services that, if disrupted, would cause significant harm to stakeholders or financial stability.
Set impact tolerances: Define acceptable thresholds for disruption (e.g., downtime, data loss) that the institution must not exceed.
Build adaptive capacity to anticipate, absorb, and recover from shocks.
Maintain trust and meet regulatory obligations.

Key Elements

An operational resilience framework for a financial institution is a structured approach to ensuring the continuity of critical services during disruptions while safeguarding stakeholders and maintaining financial stability.

Below is a comprehensive overview of the key components expected in such a framework:

1. Governance & Leadership

Clear Accountability: Define roles for the board, senior management, and operational teams to oversee resilience strategies.
Policies & Standards: Establish enterprise-wide policies aligned with regulations (e.g., FCA, ECB, Basel III).
Risk Appetite: Articulate the level of risk the institution is willing to accept for critical services.

2. Identification of Critical Business Services (CBS)

Prioritize services whose failure would significantly harm customers, market integrity, or financial stability (e.g., payment systems, deposit-taking).
Conduct Business Impact Analysis (BIA) to assess dependencies and consequences of disruption.

3. Impact Tolerances

Set measurable thresholds for downtime, data loss, or service degradation (e.g., "Payment systems must resume within 2 hours post-disruption").
Align tolerances with regulatory expectations and stakeholder needs.

4. Mapping Interdependencies

Document resources (people, technology, facilities, data) and third-party dependencies (vendors, cloud providers).
Assess single points of failure (e.g., reliance on one data center).

5. Scenario Testing & Resilience Validation

Stress Testing: Simulate severe but plausible scenarios (cyberattacks, IT outages, geopolitical crises).
Test recovery within impact tolerances and refine response plans.
Include third parties in testing where relevant.

6. Incident Response & Recovery Plans

Develop playbooks for rapid decision-making, communication, and service restoration.
Define escalation protocols and crisis management structures.
Ensure backup systems (e.g., geo-redundant data centers) and failover mechanisms.

7. Third-Party Risk Management

Assess the resilience of vendors and subcontractors through due diligence and contractual obligations.
Monitor concentration risks (e.g., over-reliance on a single provider).

8. Monitoring & Reporting

Continuously track resilience metrics (e.g., recovery times, system uptime).
Report to regulators (e.g., incident reports, testing outcomes) and internal stakeholders.

9. Continuous Improvement

Incorporate lessons from incidents, near-misses, and exercises.
Update frameworks in response to emerging threats (e.g., AI-driven cyberattacks, climate risks).

10. Culture & Awareness

Train employees on resilience roles and foster a "risk-aware" culture.
Conduct drills to ensure preparedness across all levels.

11. Regulatory Compliance & Alignment

Adhere to standards like DORA (EU), SRG 3.0 (UK), or NYDFS Cybersecurity Regulation.
Align with cross-border frameworks for global institutions.

12. Communication Strategy

Plan for transparent communication with customers, regulators, and the public during disruptions.
Manage reputational risks through timely updates.

13. Documentation & Audit

Maintain records of resilience strategies, test results, and incident responses.
Conduct independent audits to validate effectiveness.

14. Technology & Cybersecurity Focus

Embed robust IT resilience (e.g., encryption, redundancy, patch management).
Address evolving cyber threats through threat intelligence and zero-trust architectures.

15. Integration with Enterprise Risk Management (ERM)

Align operational resilience with broader risk frameworks (e.g., credit, liquidity risks).

By integrating these elements, financial institutions can build adaptive resilience, ensuring continuity during disruptions while meeting regulatory demands and maintaining trust. Regular reviews and agile adjustments are critical in a dynamic risk landscape.

Summing Up ...

Outcome

A mature framework ensures the institution can:

Operate within predefined impact tolerances during disruptions.
Adapt to evolving risks (e.g., climate change, AI-driven threats).
Maintain compliance with regulations (e.g., EU DORA, UK FCA/PRA rules).
Protect financial stability and customer confidence.

Why It Matters

Operational resilience goes beyond traditional business continuity or disaster recovery by focusing on proactive risk anticipation, holistic dependency management, and sustaining critical services in the face of increasingly complex threats.

It integrates governance, technology, people, processes, and external partnerships to build an institution-wide "safety net."

"Plan" Phase of the OR Roadmap

Assess Capability and Maturity	Analyse Gap	Develop Strategy and Roadmap	Confirm Risk Appetite	Develop and Embed Governance

More Information About Blended Learning OR-5000 [BL-OR-5] or OR-300 [BL-OR-3]

To learn more about the course and schedule, click the buttons below for the OR-3 Blended Learning OR-300 Operational Resilience Implementer course and the OR-5 Blended Learning OR-5000 Operational Resilience Expert Implementer course.