Journal of Operational Risk
ISSN:
1744-6740 (print)
1755-2710 (online)
Editor-in-chief: Marcelo Cruz
A qualitative study of operational resilience in financial institutions
Need to know
- Operational resilience should focus less on occasional adjustments under extreme circumstances and more on ensuring firms and their systems are robust and predicated on constant change.
- Following a qualitative survey style descriptive research methodology, we have harnessed perspectives from senior G-SIB employees to better understand the key risks and gaps that impact operational resilience for G-SIBs and identify strategies to improve these risks.
- Our study confirms that it is the sustained performance by resilient G-SIBs that will differentiate and make them stand out amongst their peers and for their stakeholders.
Abstract
Large financial institutions such as investment banks, retail banks and insurance companies, also known as global systemically important banks (G-SIBs), can cease to perform their critical functions when faced with major disaster events. Events such as widespread technology outages, cyber attacks and global pandemics could have a far-reaching impact, threatening the viability of these firms, as seen in the 2007–9 global financial crisis. New regulatory requirements put forth by the Bank of England and the Basel Committee on Banking Supervision (Basel III) require G-SIBs to have sound operational resilience practices for their business services. These are due to be implemented in phases by 2025. While the concept of operational resilience is not new, companies have traditionally approached it separately and as needed for specific business functions. The new requirements necessitate G-SIBs look at sustainable solutions more holistically to protect their end customers and shareholders. Our study leverages survey-style qualitative research methodology: it harnesses candid and pragmatic feedback from a sample of 21 G-SIB employees to formulate recommendations for this specific aspect of regulatory requirements. Given our findings, we encourage G-SIBs to take an open-minded approach
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