Regulation  

Does your business have operational resilience?

Dominic House

Dominic House

The Financial Conduct Authority operational resilience rules came into effect from the end of March this year.

The rules are designed to ensure the UK financial sector can weather major future disruption, such as that caused by the global pandemic, which in turn could cause harm to consumers and pose a risk to the stability of the financial system. 

So, as businesses look beyond the initial requirement to document their processes, they need to consider how they will ensure their own resilience.

Businesses can draw parallels in terms of resilience from an individual’s experience and reaction to events in the recent past. Being able to cope, adapt and thrive in difficult situations is important in a world that is rapidly changing.

While the impact of the pandemic has been far from equal, we have all had our own struggles. Whether that is in terms of care-giving, personal health or social isolation, we have needed to find ways to cope and adapt to a new situation.

Diverse industry

The way we cope differs, and often on a day-to-day basis for the same person. Resilience is not only about trying to cope no matter what, but also recognising where the limit is, and then finding the most appropriate response to the situation. At some point, everyone will need help, it’s just not always at the same point.

Just like our personal experiences, wealth businesses need to ensure resilience, but in different ways depending on the circumstances.

Operational resilience applies the same rules to both large and small companies alike. The rules may be the same, but the application of them and the mechanisms to implement the rules will be very different.

In 2021 alone, we produced approximately 500 process maps for 8 different clients. What did we find?

While we might use a defined approach and templates that we can easily mobilise to deliver process mapping, each client is different and that is crucial to factor in. Some businesses like to focus solely on identifying areas for process improvement. Others are looking for help to embed a new framework and methodology to help them focus on process mapping going forward. Each are equally valid and depend on where the business is on their growth trajectory.

Common ground

One challenge that tends to be consistent, however, is how to embed process ownership, documentation and improvements within the operational teams that are the ultimate owners.

How this can be achieved depends on many things, but often smaller organisations can struggle to provide necessary resource for this activity to be a success. The implications of letting process documentation fall out of date means another larger scale project is required to get them back on track. This is stressful and time-consuming.

Operational resilience is not just about mapping and maintaining processes. It also needs to consider what events could impact on the business's ability to continue to deliver those processes which would materially impact on the customer or the market if failures were to occur.