Operational resilience proposals: prepare for the worst

Severe disruptive events are inevitable and financial institutions must plan for maintaining supply of their core products and services, say the UK regulators. Steven Francis and Sara Evans discuss the proposed operational resilience regime, its most challenging aspects and what firms can work on right away.

Steven Francis is a partner and Sara Evans a principal knowledge lawyer at Addleshaw Goddard. Contact them at steven.francis@addleshawgoddard.com and sara.evans@addleshawgoddard.com. Addleshaw Goddard’s Operational Resilience Team has been working closely with UK Finance members in exploring the key implementation challenges and formulating the banking industry response to the UK consultations and to the Basel consultation on its proposed principles. They can assist with issues around risk control, avoiding change management pitfalls, framework development, as well as operationalising senior management and board ownership.

Financial sector resilience has been a high priority on the regulatory agenda for a number of years now. In the United Kingdom, operational resilience is a joint regulatory effort, with the Prudential Regulation Authority focused on the safety and soundness of firms and the Financial Conduct Authority on customer protection and market integrity. The Bank of England has also consulted in relation to Financial Market Infrastructures (FMIs), with a focus on ensuring financial stability.