{"id":22181,"date":"2022-07-29T06:54:32","date_gmt":"2022-07-29T05:54:32","guid":{"rendered":"https:\/\/davies-group.com\/consulting\/blog\/scenario-testing-passing-the-practical-and-the-theory-2\/"},"modified":"2026-01-23T12:59:01","modified_gmt":"2026-01-23T12:59:01","slug":"scenario-testing-passing-the-practical-and-the-theory-2","status":"publish","type":"blog","link":"https:\/\/davies-group.com\/consulting\/blog\/scenario-testing-passing-the-practical-and-the-theory-2\/","title":{"rendered":"Scenario testing: passing the practical and the theory"},"content":{"rendered":"

Operational Resilience has been a hot topic ever since the original 2018 FCA, PRA and Bank of England\u2019s Discussion Paper<\/a> and first critical deadline of March 2022. Until now, however, most of the focus has been around developing methodologies and preparing documentation to meet the initial deadline. Now it’s time for firms to bring Operational Resilience to life. That means less talk and more action, starting small and simple – and starting now.<\/p>\n

Our series of short articles provides practical guidance based on our real-life experience to help you work out what you need to do next.<\/p>\n

Get testing<\/strong><\/p>\n

Many firms are struggling with scenario testing. ‘Where do we start?\u2019 \u2018Isn\u2019t it just BCP testing?\u2019 \u2018How do we link this to our impact tolerances?\u2019 <\/em>are just some of the questions our clients ask.<\/p>\n

Scenario testing is often left to the last minute, because of perceived complexity and challenging logistics. But it shouldn\u2019t be difficult. It should be practical and, believe it or not, enjoyable.<\/p>\n

Having said that, firms’ hesitation is no surprise; this is an activity many have not had to consider before, and which can feel unnatural and challenging to navigate. Even so, it is better to start somewhere and risk getting it wrong than to prevaricate. Firms learn from mistakes and such learning should be embraced.<\/p>\n

Starting simple is the key to success.<\/p>\n

Start simple, start small<\/strong><\/p>\n

The purpose of scenario testing is to emulate severe but plausible real-life scenarios. We encourage firms to look at the disruptions that can already occur within their day-to-day activities. Firms should consider using an overarching scenario, which can then be complicated by a series of smaller events. Firms also should not be afraid to draw upon business continuity and disaster recovery plans and leverage existing work undertaken. These can provide ready-made foundations for scenarios with minimal initial planning required, and can be matured over time.<\/p>\n

Scenario testing should not be over-generated or over-thought; that is unnecessary – and even more importantly, not what the regulator initially expects. Starting simple allows firms to build up to a level where they can handle growing complexity.\u00a0 You could begin with mostly desk-based testing where participants talk through what they would do and start to introduce some initial simulation – in other words, actually create the reports that are described as part of the desk-based test. As your firm begins to mature and stakeholders start to become familiar with the testing format, you can then begin to move towards simulation and increasing levels of complexity.<\/p>\n

Starting small also allows firms (and their staff) not to be daunted, but rather to grow and ensure participants are comfortable with the process. Firms could consider:<\/p>\n