A WAKE-UP CALL
Not all that long ago, financial risk management was synonymous with credit, market, and liquidity risk. Operational risk was often an afterthought—viewed as a compliance checkbox rather than a strategic necessity.
That era is over.
Today Operational Risk, and in particular Resilience, has become one of the biggest concerns for managers, regulators, boardrooms, and customers alike. Cyberattacks cripple banks overnight. Third-party service providers fail without warning. AI-driven fraud evolves faster than firms can react. Meanwhile, geopolitical tensions, pandemics, and climate-related disruptions expose deep fragilities in the financial system.
Regulators have taken notice—and they are responding to these risks.
The Basel Committee’s Principles for Operational Resilience (POR), UK’s FCA/PRA framework, US OCC/FRB guidance, and similar mandates worldwide are no longer just suggestions. They represent a fundamental shift in how financial institutions must think about risk.
This article explores:
- Why Operational Resilience is different from traditional risk management
- The new regulatory expectations and why they matter
- How financial institutions can turn Resilience into a strategic advantage
BEYOND BUSINESS CONTINUITY: WHAT OPERATIONAL RESILIENCE REALLY MEANS?
Most financial institutions believe they are prepared for disruptions. After all, they have:
- A Business Continuity Plan (BCP)
- A Disaster Recovery (DR) strategy
- A Risk and Compliance function
So why the urgency around Operational Resilience? Because none of these frameworks were designed for today’s risks. Business Continuity and Disaster Recovery focus on restoring operations after a disruption. Operational Resilience, in contrast, is about ensuring that critical business services can continue to function during and after a disruption—with minimal customer impact.
Consider this scenario:
- A cyberattack locks a bank’s customers out of their accounts for two days. The bank activates its recovery plan, but customers have already lost trust and taken their business elsewhere.
- A major cloud provider supporting a financial institution goes offline for several hours. The bank’s systems recover, but regulators (and other key stakeholders) demand answers: Why wasn’t there a backup strategy? Why were impact tolerances not defined?
- A geopolitical crisis disrupts international payment flows. Regulators ask: Did the firm anticipate this risk? Was there a plan in place to reroute these transactions?
In each case, having a recovery plan wasn’t enough. What mattered was the ability to sustain critical services under stress.
The Regulatory Shift: From Compliance to Resilience
In response to these challenges, global regulators have moved past traditional risk frameworks and introduced new, more stringent expectations for Operational Resilience.
KEY REGULATORY PRINCIPLES:
- MAPPING CRITICAL BUSINESS SERVICES: Firms must identify essential services (e.g., payments processing, trade settlements) and their dependencies on third parties, IT infrastructure, and human resources.
- IMPACT TOLERANCES: Instead of just planning for disruptions, firms must define how long they can withstand them before customer harm or systemic risk occurs.
- SCENARIO TESTING: Institutions must run severe but plausible stress scenarios—cyberattacks, supply chain collapses, cloud failures—and demonstrate how they would maintain critical operations.
- BOARD AND EXECUTIVE ACCOUNTABILITY: Operational Resilience is no longer just a risk function’s problem. Senior executives and boards are personally accountable for resilience failures.
- THIRD-PARTY AND TECHNOLOGY RISK MANAGEMENT: Institutions must evaluate whether outsourced services and technology partners meet resilience requirements. The regulator’s stance is: “Your third-party risk is your risk.”
These requirements are already enforceable in multiple jurisdictions—and the penalties for failure are severe.
OPERATIONAL RESILIENCE AS A COMPETITIVE ADVANTAGE
While regulatory compliance is driving the adoption of Operational Resilience, firms that go beyond basic regulatory mandates will gain a significant competitive edge.
- RESILIENCE = CUSTOMER TRUST
- A resilient financial institution is one that customers can rely on even in times of crisis.
- Reputation risk is now one of the greatest financial risks—firms that suffer repeated outages or a breach of trust results in losing customers permanently.
- RESILIENCE PROTECTS AGAINST FINANCIAL LOSS
- The costs of operational failures are skyrocketing. Regulatory fines, litigation, customer compensation, and reputational damage can cost banks a significant amount.
- Investing in proactive resilience measures is far cheaper than dealing with the aftermath of a failure.
- RESILIENCE ENABLES INNOVATION
- Many firms hesitate to adopt new technologies due to risk concerns. A strong resilience framework allows institutions to embrace innovation without compromising stability.
- RESILIENCE STRENGTHENS CYBERSECURITY POSTURE
- Cyber resilience is no longer just an IT issue—it’s a board-level business priority.
- Operational Resilience frameworks force institutions to address cybersecurity risks more comprehensively.
How does RiskCounts Help?
At RiskCounts, we recognize that resilience is not just about compliance—it’s about ensuring business continuity, protecting customer trust, and maintaining financial stability. We work with financial institutions to:
- Conduct Regulatory Gap Assessments – Benchmark resilience programs against global mandates
- Develop Scenario-Based Resilience Strategies – Identify and test real-world disruptions
- Optimize Third-Party Risk Management – Ensure critical vendors meet resilience requirements
- Embed Resilience into Governance & Culture – Train leadership/operational teams to sustain resilience
In today’s volatile environment, RESILIENCE IS THE NEW RISK ADVANTAGE. The question is no longer IF your firm will face an operational crisis—but how well you will withstand it WHEN it happens.
CONCLUSION
Operational Resilience is not just a regulatory requirement—it is a business necessity. Institutions that fail to prioritize resilience will face:
- Increased regulatory scrutiny
- Customer attrition and reputational damage
- Financial and operational instability
The good news? Firms that act now, can turn resilience into a strategic differentiator.
What is the landscape and your organization’s approach to Operational Resilience?
How would you characterize your journey towards resilience as discussed above?
Let’s have a conversation.
