[OR] [RBI] [e2] Chapter 1: Introduction to Operational Resilience

Chapter 1: Introduction to Operational Resilience (OR)

This is eBook 2 or Part 2 of the Reserve Bank of India's (RBI) Guidance Note for ORM and OR.   eBook 2, "Strengthening Operational Resilience: Mapping and Managing Dependencies in Financial Operations, " examines operational resilience (OR) in more detail, focusing on mapping critical operations and managing third-party dependencies.

This eBook highlights the importance of understanding interdependencies within financial operations and how these connections can either fortify or undermine operational resilience.

This eBook series supplements the work of professionals attending BCM Institute's Operational Resilience (OR) Implementer and Expert-level certification and training course who must comply with RBI's Guidance Note.  

These OR intermediate- and expert-level training are designed for professionals implementing OR globally.

Definition and Need for Operational Resilience

The concept goes beyond traditional risk management by focusing on service continuity, even in the face of severe and unexpected events.

This approach is essential in today's dynamic financial environment, where disruptions can originate from various sources, including natural disasters, cyber-attacks, pandemics, and technological failures.

For Indian financial institutions, OR is not just a regulatory requirement but a necessity for maintaining trust and stability in the financial system. The need for OR arises from the increasing complexity of financial operations, the reliance on third-party service providers, and the interconnectedness of the global financial ecosystem.

Ensuring that critical operations or services continue to operate during disruptions protects the institution's reputation, preserves customer confidence, and mitigates the impact on the broader economy.

Operational Resilience in the Context of Indian Financial Institutions

In the context of Indian financial institutions, OR has become a focal point for regulators and industry players alike.

The Reserve Bank of India (RBI) has emphasized the importance of OR through various guidelines, including its Guidance Note on Operational Risk Management (ORM) and Operational Resilience (OR).

Indian financial institutions, ranging from large commercial banks to smaller non-banking financial companies (NBFCs), must align their operations with these guidelines to ensure compliance and safeguard against disruptions.

The Indian financial landscape presents unique challenges, such as diverse customer bases, varying levels of technological adoption, and an evolving regulatory framework. OR, therefore, must be tailored to address these specific challenges while ensuring alignment with global best practices.

By building a robust OR framework, Indian financial institutions can enhance their ability to respond to disruptions, ensuring continuity in their operations and contributing to the overall stability of the financial system.

Relationship Between ORM and OR

Operational Risk Management (ORM) and Operational Resilience (OR) are closely interconnected, though they serve different purposes.

ORM identifies, assesses, and mitigates risks that could lead to operational failures. It involves implementing controls and monitoring mechanisms to prevent risks from materialising or to minimise their impact if they do.

On the other hand, OR emphasises the institution's ability to continue delivering critical operations even when risks materialise. It acknowledges that not all risks can be prevented and focuses on the institution's preparedness to handle disruptions.

OR builds on the foundations of ORM by ensuring that when risks become a reality, the institution can still function effectively.

Summing Up ... Final Thoughts

In essence, ORM and OR are two sides of the same coin. ORM aims to reduce the likelihood of disruptions, while OR ensures that the institution remains resilient when operational disruptions occur.

Together, they form a comprehensive approach to safeguarding financial operations, protecting the institution's reputation, and maintaining customer trust.

Related OR Terminology

Reserve Bank of India's Guidance Note on ORM and OR Book Series [2]
Strengthening Resilience: Mapping and Managing Dependencies in Financial Operations

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

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