Amid ongoing industry disruption, financial institutions need to embed operational resiliency into their overall strategic plan
Operational resilience is usually defined as an organisation’s ability to adapt to rapidly changing environments. This includes the resilience of systems, processes and people and more generally the organisation’s ability to continue to operate during disruptive events.
The world, and Hong Kong in particular, has seen its fair share of disruptive events in recent times. Over the past twelve months, we have seen the global spread of the novel coronavirus (COVID-19), social unrest in Hong Kong and uncontrollable wildfires in Australia, among many other significant global and regional events that have severely impacted the day-to-day lives of many people, and the “business-as-usual” operations of many organisations across sectors, including financial services. These disruptions have not been one-off short-term disruptions, but instead, significant enough to force organisations to permanently adapt their ways of working to ensure that they are able to operate under the “new normal”.
Operational resilience has always been an important area of focus for financial institutions, their regulators and supervisors. However, the discipline of resilience was in general more targeted towards specific areas of risk such as cybersecurity or outsourcing. Today, organisations and regulators are starting to take a broader view of resilience covering all risks to the provision of business services.
The magnitude of disruption the industry has experienced means that the financial services sector needs to look at operational resiliency as more than just another compliance exercise – it needs to be part of each organisation’s overall strategic plan. Companies need to move away from being reactive to begin proactively planning for not “if” but “when” circumstances change, and strongly consider that these changes may likely be permanent.
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