AENGUS HALLINAN | Chief Technology Risk Officer, BNY Mellon
The 2008 global financial crisis served to illustrate the interconnectedness and the global nature of the world’s increasingly complicated financial services sector. While the concept of financial resilience has been front of mind for regulators for decades, the broader concept of operational resilience has gathered momentum and increasing focus over the past 10 years.
The financial system has shown itself to be robust in the face of the COVID-19 pandemic to date, however, the pandemic has also served to further illustrate the broad nature of disruption that can quickly spread across the world. Regulators, boards, and senior executives have shifted their view from resilience being about responsiveness to specific events, such as a cybersecurity incident, to the wider multi-faceted question of operational resilience and preparedness for severe disruption – regardless of cause.
Regulators across the globe are converging on a common definition and it is broader than ever before, with expectations around preparing for, responding and adapting to, and recovering and learning from severe disruption. There is recognition that vulnerability at a single firm, financial utility, or third-party provider can result in substantial negative consequences across the financial system. Boundaries are greyer and wider than ever – and previously considered individual risks are converging faster.
Regulators are focused on ensuring operational resilience is paramount in protecting financial stability as an essential service. While firms need to be prepared, they should also see operational resilience as an opportunity to positively differentiate themselves in the eyes of their clients and other key stakeholders.