Trying times over the past couple of years have highlighted the importance of building resilience. In the face of constant stress and waves of disruption, the ability to adapt, withstand and, importantly, to learn from adversity is a key quality for individuals and organizations alike. In the financial sector, it’s essential.
The Bank of England defines operational resilience as “the ability of firms and financial sector as a whole to prevent, adapt, respond to, recover, and learn from operational disruptions.”
For well over a year now, the COVID-19 pandemic has disrupted business and put operational strain on many financial services firms. For example, employees working from home poses significant risk due to increased exposure to data leaks, weak passwords, unencrypted file sharing and insecure personal devices and home Wi-Fi. Firms must have – or develop – the ability to adapt and learn from this challenge in order to prepare for and prevent future disruptions from impacting the business.
The pandemic has been a steady disruptor, but it’s hardly the only one. Phishing schemes, sophisticated cyber-attacks, websites downed by domain name system (DNS) outages and other threats require attention and planning from firms, who are also facing growing regulatory scrutiny and evolving customer expectations. The stakes are high: disruptions to important business services can potentially harm customers, the financial system and the economy.
Confronted with a rise in disruptions, firms must map their customer journey, identify all services and assess critical services. It’s vital to understand the impact of disruptions on the end customer and the economy, as regulators are increasingly monitoring this closely. Failure to achieve operational resilience could, in fact, result in regulatory actions for UK-based firms, while regulators in other countries are also issuing papers and guidance pushing firms to change how they manage important business services.
5 steps for building operational resilience
Many banks are burdened with disconnected operational processes that can result in bad customer experiences. The inability to transact online or withdraw money on payday due to a bank’s platform outage has a real impact on customer experience and loyalty. Consumers today would not hesitate to switch brands in search of a better experience. Therefore, it is incumbent upon firms to recognize vulnerabilities in their operational resilience.
We recommend that firms identify their important business services, set impact tolerances for the maximum tolerable disruption, and then carry out mapping and testing. Here are some basic steps to strengthen operational resilience.
- Identify the most important business services and the processes that underpin those services
- Map all critical components that provide essential services (tech, data, third-party suppliers, etc)
- Stress test for severe but plausible scenarios and assess the impact of change
- Communicate effectively when disruptions occur
- Determine where to invest based on important business services
Where disconnected processes can be a burden for banks, Dassault Systèmes offers a solution to .
The 3DEXPERIENCE platform seamlessly integrates customers’ deployed operational risk tools and connects end-to-end our range of sophisticated operational resilience capabilities, including mapping, predictive maintenance analytics and virtual simulation.
Learn more about Strengthening Operational Resilience with the 3DEXPERIENCE platform. Download our Operational Resilience Flyer.
Taherah Kuhl is Vice President of the Business Services Industry at Dassault Systèmes