How Can Financial Institutions Benefit From Investing In Resilience?
In recent years, the importance of companies developing operational resilience in the financial sector has increased. This is sought with the purpose of guaranteeing financial stability, preserving market integrity, and preventing possible harm to clients. But how can organizations develop operational resilience?
A fundamental principle underpinning operational resilience in the digital space is that companies in the financial services sector should seek to prevent and also prepare for inevitable ICT-related disruptions and have measures in place to respond to, recover from, and limit the impact of any incident.
That said, in order to implement an effective resilience program, you must take into account its key principles.
The Principles Of Operational Resilience
1. Establish effective ownership at the level of the board of directors and senior management and have solid and committed leadership capable of making strategic decisions that strengthen the company’s ability to face unexpected challenges.
2. Identify the critical functions and all related activities necessary for the bank to maintain its operations.
3. Establish impact tolerances for these services.
4. Test the company’s ability to maintain its activity despite suffering the impacts produced during severe scenarios.
5. Continuously review and learn from how the company responds to disruptive events to incorporate lessons learned and iteratively improve resilience operations over time.
Given what we know about digital investments that deliver value, we suggest that companies focus on increasing their operational resilience in the digital space by accentuating their mastery of fundamental capabilities in four key domains: data, operations, risk management, and automation. And AI.
By rethinking how technology can be intelligently combined to improve data orchestration, operations, risk, and automation capabilities, supporting them with the right talent and processes to bring digital will and skills to their implementation, financial institutions can comprehensively address the emerging challenges of today’s business environment.
Also Read: FinTech’s Are The Digitization Drivers Of The Financial Sector
What Should Financial Institutions Do?
We recommend that financial services organizations focus on integrating security and stability across the ICT sector; drive proactive and prioritized risk mitigation; enable continuous monitoring and rapid response to threats; help adaptive business continuity and data recovery; promote interoperability and technical optionality; create strengthened and simplified governance; and finally, prioritize resource allocation based on the critical importance of the business service.
To achieve the above, organizations must focus on their ability to adapt and recover from negative surprises and disruptions.
These disruption scenarios can include threats caused by human action (such as physical attacks, cyber-attacks, IT system outages, and third-party risks) and natural hazards (such as fires, floods, severe weather, and pandemics).
The journey to strategically build operational resilience in the digital realm must begin by prioritizing critical functions. Next, organizations should delve deeper into processes, technological interconnections, and interdependencies across the enterprise.