Operational Resilience – are your ducks in a row?

Gordon MacKinnon
Specialist Client Director
Financial Services
07594 511339

There is currently significant focus in the Financial Services sector on operational resilience. This has been driven by the Financial Conduct Authority (FCA) and their Policy Statement issued in March 2021, coming into force in March 2022.

So what could operational resilience mean for your organisation, and what can you do to prepare?

Operational resilience is defined by the FCA as “the ability of firms, financial market infrastructures and the financial sector as a whole to prevent, adapt and respond to, recover and learn from operational disruption”.

The upcoming implementation of these policies means action is now required by all those regulated by the FCA.

Whilst much of the initial focus will be around Governance and IT looking at the “usual suspects” of cyber attacks, user access, supply chain reliance, and internal organisational challenges such as legacy IT platforms, many organisations are now looking at their own internal processes and asking whether they are robust to support their end customers.

So, what actions need to be taken now?

The FCA has set out a timetable giving organisations a three year transition period starting in March 2022, where they will need to have:

• Identified their important business services that, if disrupted, could cause intolerable harm to consumers, risk to market integrity, threaten the viability of firms or cause instability in the financial system
• Set impact tolerances for maximum disruption to services
• Carried out mapping and testing to identify important business services, set impact tolerances and identify any vulnerabilities
• Conducted lessons learnt exercises to identify, prioritise, and invest in their ability to respond and recover from disruptions as effectively as possible
• Developed internal and external communications plans for when important business services are disrupted
• Prepared self-assessment documentation

At Latcham, we focus on your customer communication processes, as we understand that if your existing processes in this area are not robust, this will have an impact on a large number of your customers. Having the ability to effectively communicate with your customer base is key.

Financial Services is one of the most regulated industries of all, and rightly so. We all need a resilient financial system. This piece of legislation is really putting the spotlight on something which should already be in place. Surely all our processes should be resilient?

However, the reality is many business processes have evolved over time, and at Latcham we are now working with a number of clients looking at Hybrid Mail and digital communication solutions, as well as others who are looking at alternatives to their existing localised Post / Mail rooms.

The reason for having operational resilience is that it is in the interests of the public. Therefore, the FCA will expect organisations to report material operational incidents if it affects a large number of customers.

The mindset of “if it ain’t broke, don’t fix it” is being challenged, and organisations are now looking to revise and improve these processes. If the processes you use to send customer communications are not operationally resilient, now is the time to act.

As someone who has worked within the Financial Services sector for many years, I am now speaking with a number of companies about changing their customer communication processes for the better.  We offer a consultancy-led approach to our clients to manage their communications processes, helping to ensure compliance.

If you would like to know more, please contact me at gordon.mackinnon@latcham.co.uk or fill out the form below.