Operational Resilience: Reserve Bank of India's Guidance Note on ORM and OR Series
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[OR] [RBI] [10] Essential Elements of Operational Resilience

In today’s interconnected financial ecosystem, understanding an organisation's complex web of dependencies is crucial for maintaining operational resilience. Principle 10 of the Reserve Bank of India's Guidance Note emphasizes the need for comprehensive mapping of interconnections and interdependencies essential for delivering critical operations. This involves identifying key people, technologies, processes, and third-party relationships underpinning the organization’s most vital functions. By thoroughly mapping these elements, financial institutions can pinpoint vulnerabilities, mitigate risks, and ensure seamless continuity during disruptions.

Without a clear understanding of how internal and external elements interact, organizations risk underestimating the impact of disruptions. Principle 10 encourages institutions to adopt a granular mapping approach, which helps identify single points of failure, concentration risks, and inadequate resource substitutability. By doing so, businesses can strengthen their resilience framework and be better equipped to maintain critical operations—even during unforeseen events.

Read on to explore how detailed mapping of your operations can safeguard against potential risks and enhance your organization's preparedness for the future.

Moh Heng Goh
Operational Resilience Certified Planner-Specialist-Expert

Essential Elements of Operational Resilience

Operational resilience is built on several essential elements that enable an organization to withstand and quickly recover from disruptions.

These elements include strong governance, comprehensive risk management, effective incident response, and continuous improvement.

By ensuring that each of these components is well-established and integrated, organizations can maintain critical functions, protect their reputation, and meet regulatory requirements even in the face of unforeseen challenges.

Operational resilience is about surviving disruptions and thriving in a dynamic and often unpredictable environment.

Principle 10: Integration with Operational Risk Management

Operational resilience results from effective Operational Risk management, encompassing risk identification, assessment, mitigation, and control monitoring.

Recognising that disruptions are inevitable, REs (financial institutions) must prepare to respond, adapt, recover, and learn from such events with minimal impact on critical operations.

This proactive approach supports an RE's ability to maintain continuous operations and minimize losses during disruptions.

Critical Components of Operational Resilience

Preparedness and Flexibility
  • Preparedness. Ensuring adequate preparation to withstand and absorb disruptions.
  • Flexibility. Developing the ability to respond, adapt, and recover from disruptions.
Business Continuity and Third-Party Dependencies
  • Maintaining robust business continuity plans.
  • Managing dependencies on third-party providers.
  • Ensuring reliable technology infrastructure.
Consistent Implementation of Risk Management Frameworks
  • Integrating business continuity, third-party risk management, ICT & cyber risk management, and incident management within the broader Operational Risk Management framework.
  • Adopting a holistic approach to enhance resilience across all critical operations.
Focus on Critical Operations
  • Prioritising operations essential to the RE and the financial system.
  • Understanding interconnections and interdependencies in delivering these operations.
Harmonization with Recovery and Resolution Plans
  • Aligning operational resilience strategies with recovery and resolution plans to ensure financial system stability.
  • Ensuring that critical operations and shared services are protected and prioritized.
  • By adopting these principles, REs can enhance their operational resilience, ensuring continuous operation and stability despite disruptions.

Comments from the Author

New call-to-actionOperational Risk Management and Operational Resilience should be closely aligned.

From the perspective of Operational Resilience, Operational Risk Management is the key pillar supporting Operational Resilience.

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