Each year, enterprises face increasingly complex challenges as they strive to keep pace with the rapid advancements in technology and meet the growing expectations of their customers. This rings especially true for industries that are heavily regulated, as they must navigate a continuously evolving regulatory landscape while also addressing requirements for privacy, resilience, cybersecurity, and data sovereignty, among other aspects. For organizations operating in the financial services, healthcare, and other regulated sectors, managing risk becomes an even greater priority, not only to fulfill compliance obligations but also to maintain customer confidence and trust.
One critical area that enterprises must address is operational resilience. The fundamental principle of operational resilience is rooted in the belief that disruptions are inevitable, and organizations must be prepared to absorb and adapt to any shocks that come their way. These disruptions can range from cyber incidents and technology failures to natural disasters and beyond. As businesses become increasingly dependent on technology and rely on third and fourth parties, there is a growing expectation for organizations to continue delivering essential services during major disruptions while ensuring safety and security. This necessitates proactive measures to minimize downtime and address vulnerabilities in the supply chain, enabling businesses to remain competitive in an unpredictable environment.
However, operational resilience differs from the traditional approach of disaster recovery. In the past, companies focused on returning to normal operations within a few days after an event, with specific recovery point objectives and recovery time objectives. While this practice remains important, there is a diminishing appetite for conventional disaster recovery approaches across various industries, particularly among regulators. This is evident in the emergence of new regulatory requirements and expectations worldwide. For instance, the UK’s Bank of England has introduced the Critical Third-Party regime, Europe has implemented the Digital Operational Resilience Act, Australia has the APRA CPS-230 Operational Risk Management, and Canada has the OSFI – Operational Resilience and Operational Risk Management. In the United States, the Office of the Comptroller of the Currency (OCC) is also recognizing the need for operational resilience.
Organizations must therefore prioritize operational resilience to ensure stability, market integrity, and the protection of confidential data for both themselves and their customers. By investing in robust strategies and technologies that can absorb shocks while enabling the continuation of critical business services, enterprises can build trust, maintain their competitive edge, and uphold regulatory compliance.
Frequently Asked Questions (FAQ)
What is operational resilience?
Operational resilience refers to an organization’s ability to anticipate, respond to, and recover from various shocks and disruptions, such as cyber incidents, technology failures, and natural disasters. It involves implementing measures and strategies to minimize downtime, preserve market integrity, and protect confidential data.
How does operational resilience differ from disaster recovery?
While disaster recovery focuses on returning to normal operations within a defined timeframe after an event, operational resilience takes a more proactive approach. It assumes that disruptions are inevitable and seeks to absorb and adapt to shocks, rather than simply recovering from them. Operational resilience considers a wider range of potential disruptions and emphasizes the continuity of critical business services.
Why is operational resilience important for regulated industries?
Regulated industries, such as financial services and healthcare, face additional challenges and expectations due to their regulatory obligations. Operational resilience is crucial in these sectors to meet compliance requirements, maintain customer confidence, and protect sensitive information. By prioritizing operational resilience, regulated industries can effectively manage risks and demonstrate their commitment to stability and data security.
Sources:
– UK Bank of England: https://www.bankofengland.co.uk/prudential-regulation/gradual-removal-of-the-critical-third-party-regime
– European Commission: https://ec.europa.eu/digital-single-market/en/news/consultation-digital-operational-resilience-act-dora
– Australian Prudential Regulation Authority: https://www.apra.gov.au/cross-industry/cps-230-operational-risk-management
– Office of the Superintendent of Financial Institutions Canada: https://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/rtn-rrm/Pages/rrm.aspx
– Office of the Comptroller of the Currency: https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-10.html
Each year, industries face increasingly complex challenges as they strive to keep pace with rapid advancements in technology and meet the growing expectations of their customers. This rings especially true for industries that are heavily regulated, as they must navigate a continuously evolving regulatory landscape while also addressing requirements for privacy, resilience, cybersecurity, and data sovereignty, among other aspects. For organizations operating in the financial services, healthcare, and other regulated sectors, managing risk becomes an even greater priority, not only to fulfill compliance obligations but also to maintain customer confidence and trust.
One critical area that enterprises must address is operational resilience. The fundamental principle of operational resilience is rooted in the belief that disruptions are inevitable, and organizations must be prepared to absorb and adapt to any shocks that come their way. These disruptions can range from cyber incidents and technology failures to natural disasters and beyond. As businesses become increasingly dependent on technology and rely on third and fourth parties, there is a growing expectation for organizations to continue delivering essential services during major disruptions while ensuring safety and security. This necessitates proactive measures to minimize downtime and address vulnerabilities in the supply chain, enabling businesses to remain competitive in an unpredictable environment.
However, operational resilience differs from the traditional approach of disaster recovery. In the past, companies focused on returning to normal operations within a few days after an event, with specific recovery point objectives and recovery time objectives. While this practice remains important, there is a diminishing appetite for conventional disaster recovery approaches across various industries, particularly among regulators. This is evident in the emergence of new regulatory requirements and expectations worldwide. For instance, the UK’s Bank of England has introduced the Critical Third-Party regime, Europe has implemented the Digital Operational Resilience Act, Australia has the APRA CPS-230 Operational Risk Management, and Canada has the OSFI – Operational Resilience and Operational Risk Management. In the United States, the Office of the Comptroller of the Currency (OCC) is also recognizing the need for operational resilience.
Organizations must therefore prioritize operational resilience to ensure stability, market integrity, and the protection of confidential data for both themselves and their customers. By investing in robust strategies and technologies that can absorb shocks while enabling the continuation of critical business services, enterprises can build trust, maintain their competitive edge, and uphold regulatory compliance.
What is operational resilience?
Operational resilience refers to an organization’s ability to anticipate, respond to, and recover from various shocks and disruptions, such as cyber incidents, technology failures, and natural disasters. It involves implementing measures and strategies to minimize downtime, preserve market integrity, and protect confidential data.
How does operational resilience differ from disaster recovery?
While disaster recovery focuses on returning to normal operations within a defined timeframe after an event, operational resilience takes a more proactive approach. It assumes that disruptions are inevitable and seeks to absorb and adapt to shocks, rather than simply recovering from them. Operational resilience considers a wider range of potential disruptions and emphasizes the continuity of critical business services.
Why is operational resilience important for regulated industries?
Regulated industries, such as financial services and healthcare, face additional challenges and expectations due to their regulatory obligations. Operational resilience is crucial in these sectors to meet compliance requirements, maintain customer confidence, and protect sensitive information. By prioritizing operational resilience, regulated industries can effectively manage risks and demonstrate their commitment to stability and data security.
Sources:
– UK Bank of England: link name
– European Commission: link name
– Australian Prudential Regulation Authority: link name
– Office of the Superintendent of Financial Institutions Canada: link name
– Office of the Comptroller of the Currency: link name