Operational resilience: a regulatory paradigm shift?

The concept of ‘operational resilience’ has become increasingly prominent in financial regulatory rhetoric in recent years. But who would have predicted at the start of 2020 that the industry’s capacity to respond to disruption was so soon to be put to the test? Charlotte Hill and Clare Reynolds examine current proposals and what firms will need to have in place.

Charlotte Hill is a partner and head of the financial services regulatory group at Taylor Wessing in London, where Clare Reynolds is a senior associate. Contact them on c.hill@taylorwessing.com and c.reynolds@taylorwessing.com.

The Covid-19 pandemic has brought into sharp relief the need for financial services firms to have in place robust contingency plans. Are firms ready for when disruption happens and how can they best prepare? To answer this, firms need to become familiar with what has become the watchword in the regulators’ lexicon: ‘operational resilience’. Recent proposals would embed operational resilience requirements into the financial services regulatory framework, going beyond existing requirements for business continuity and marking a shift in focus to a more holistic approach to resiliency.