Is your business resilient? It’s a simple question, and many of us would like to answer with a simple yes. However, it’s the unfortunate case that many aren’t.

Regulators are increasingly focusing on resiliency. These firms must ensure their businesses are able to prevent, adapt, and respond to any and all outside disruptions. This includes being able to quickly recover and respond to sudden changes. The disruption caused by COVID-19 has displayed why it is critical for firms to invest in their resiliency to protect themselves, their consumers, and the financial system. 

To ensure that companies are operationally resilient, regulatory bodies governing the financial services of the UK have united to introduce a new Operational Resilience Policy. Coming into effect on March 31st, 2022, the policy will address operational risk management, business continuity planning, and the management of outsourced relationships. 

Firms will be given a three-year transition period until March 2025. During this time, they are expected to continue business mapping and scenario testing to ensure they can comply with policy guidelines long term.

Resiliency is not a destination, it’s a way of being. Even small changes can contribute towards a stronger tomorrow. Now is the best time to do something to ensure your firm is resilient. 

But how can this be achieved? It all comes down to bringing together cross-functional teams across your institution to collaborate and improve your organisation’s clarity, agility, reliability, and simplicity. 

1. Clarity

To be as resilient as possible, financial leaders must be able to identify the biggest risks to their organisations. The more clarity and visibility decision-makers have over their business operations, the better the quality and overall business performance. Having a clear view of processes across the enterprise is key for financial leaders, and is one of the main indicators that the correct procedures are being followed. 

Having a lack of clarity leads to delayed decisions and costly mistakes. This was especially vital at the start of the pandemic when financial companies were blindsided by the dramatic change in the financial landscape and the push to digitalise.

2. Agility

Being agile is no longer a ‘nice to have’. It is a necessity. Ultimately, agility is a competitive advantage as banks continue to face more uncertainty and complexity. For example, FinTech startups are disrupting the market and encouraging traditional financial organisations to step up and adapt quickly. The ability to respond quickly to change is now becoming the hallmark of highly digitised organisations as a result.

With most companies operating remotely - at least in hybrid form - migrating systems to the cloud can help companies move at the speed their customers and employees demand.  Moreover, cloud capabilities can simplify the process for organisations to quickly deploy and scale new solutions.

3. Reliability

While reliability should be a given, it is difficult to achieve. Especially as we consider the complex environments we must work in: whether hybrid, on-premise, or a combination of the two.

To achieve consistency and quality results time after time, financial firms must ensure that they have the right operations and business processes in place. By allowing companies to map out their operational frameworks in detail, business leaders can make sure they are dependable. 

In situations where this is not possible, it’s crucial that organisations can detect failure and respond to it swiftly. After all, the enterprise IT landscape has changed significantly in recent times, so outdated technology systems that take a long time to adapt to new innovations cannot cope in this environment. Building systems that are reliable, no matter what changes we may see, is critical now.

4. Simplicity 

The final step is to ensure your organisation has a smooth and easy process in place for making business decisions. Simplicity requires a firm to have focus and a defined decision-making procedure for business leaders which is straightforward, intuitive, and unambiguous.

Smooth business decision systems are key when companies are making business continuity plans for the future. This helps to ensure that in the case of a severe business disruption, the firm is able to operate on an ongoing basis with limited losses. 

The bottom line

This exciting new policy challenges financial institutions to change how they operate, leading to better decision-making, collaboration, and insights. Firms currently going through this change might feel a little overwhelmed, but the four principles mentioned above can help guide and shape this journey.

Operational resiliency is vital for the financial sector to be as forward-thinking as possible. It is crucial when putting adequate contingency and business continuity plans in place, and in allowing swift responses to any outside disruptions.

As the UK’s Operational Resilience Policy draws closer, we’re going to see banks make a step-change in their processes. Keeping clarity, agility, reliability and simplicity front of mind will be critical in doing so.