As we have seen over the past year, investment businesses appear pretty resilient. There is now a great opportunity to embed resilience disciplines and enhanced oversight regimes to not only strengthen and improve your business but also align with regulation.
Since the release of the joint FCA / BofE / PRA Operational Resilience consultation paper (FCA CP 19/32) in 2018, there has been much discussion across the investments industry regarding the measures required to demonstrate increased operational resilience. Unsurprisingly, the experiences of the past 12 months where firms faced perhaps the ultimate test of their resilience – these discussions were rapidly brought to life as continuity of business operations became critical in maintaining confidence across their clients, their investors and the market.
With the FCA’s consultation period for CP19/32 closing in October 2020, we are now focussing our attention towards how firms can best optimise operations and enhance oversight to ensure their operational resilience. Earning and retaining both client and industry-wide trust remains the top priority as always however, how investment firms must go about achieving this has, and is, changing. One route is by having thorough operational oversight across an increasingly outsourced operating ‘ecosystem’ – compounded by a hybrid working model – such that the model can both better withstand and recover from disruption. We can all agree regardless of what is and is not being requested by regulators, this is crucial to maintaining the integrity of business operations.
Businesses can be disrupted, and harm caused, by a wide range of incidents and threats – ranging from an outage of a critical service provider to cyber-attack. Many of the safety-nets previously turned to – around BCP and DR – do not go far enough, especially when the complexities of a multi-partner operating ‘ecosystem’ and hybrid working models are also factored in.
We appreciate firms have specific challenges and concerns (governed by firm size, extent of outsourcing, strategy, maturity) when identifying what services are truly the most important – a universal ‘catch-all’ approach to identifying and solutioning your key business services is neither impact focussed nor resource or time-efficient. As the year progresses, Davies intends to continue the dialogue around Operational Oversight & Resilience, sharing our own thoughts and insights as we work with clients and monitor further industry-wide developments.
30th March 2021: our next Davies Signals event focuses on Operational Resilience, exploring the impacts and state of readiness through a technology lens. Register to attend here.
Authors James Hockley (left) and Aqib Raja
