Since the UK regulatory discussion paper on operational resilience was issued in July 2018, KPMG has had the privilege of working with many of our clients in developing strategy and supporting execution. Following up on this, in December 2019 the UK regulators released a series of consultation papers building upon and adding clarification to the points in the discussion paper.
A key, shared priority for the Bank of England, Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) is to put in place a stronger regulatory framework to promote operational resilience of firms and the Financial Market Infrastructure (FMI). As a consequence, although the policy proposals brought forward for consultation are tailored to the individual policy frameworks and supervisory approach of each respective authority, they share a common overarching approach to operational resilience.
Having analysed the content of the papers, KPMG has identified the following key themes:
Whilst these are UK regulatory proposals, it is also important to consider the increase in focus on operational resilience from a global perspective:
KPMG believes that, given the importance being given to operational resilience across the international regulatory environment, we can expect to see increasing collaboration and convergence in this space.
The consultation papers have confirmed that, in future, operational resilience will be scrutinised as much as financial resilience in the UK, and will be embedded in the regulatory framework. It is now clear that firms will be required to put in place robust management frameworks to prioritise and allocate investment to deliver resilience across important business services. From this point we are currently expecting final policy in late 2020, all the rules then taking effect a year after publication, with firms having longer (up to three years) to be able to show they are able to remain within impact tolerance for their important business services.
KPMG believes that with the additional information and clarification provided firms can move forward with confidence, but they should take care to ensure that their plans place proper emphasis on the scalability and sustainability of solutions. Please contact us if you would like to explore how we can help to accelerate your progress.
Click the link below to download and read our latest insights and response to the recently released UK Regulatory Consultation Papers.