Operational resilience is the ability of a financial institution to prevent, adapt to, respond to, recover from, and learn from operational disruptions. In compliance and risk management, operational resilience ensures that firms can maintain critical services even during severe but plausible events such as cyber-attacks, system outages, or geopolitical crises.
Unlike traditional business continuity planning, operational resilience is proactive. It requires firms to understand the services most critical to customers, regulators, and the wider financial system, and to plan how to maintain them under stress. Regulators now expect resilience to be a core part of compliance frameworks, emphasising governance, accountability, and risk-based planning.
Definition Of Operational Resilience
Operational resilience is the capacity of an organisation to ensure continuity of critical business services by anticipating, withstanding, recovering from, and adapting to operational disruptions.
In financial services, it is not simply about IT recovery or crisis response. Instead, operational resilience focuses on outcomes for customers and markets, ensuring that vital services, such as payments or trading, remain available no matter the disruption.
Why Operational Resilience Is Important In Compliance
The financial system is interconnected, and a disruption in one area can create cascading risks. Regulators see operational resilience as critical for protecting customers, maintaining trust, and safeguarding market stability.
Protecting Consumers
When critical services fail, customers lose access to payments, savings, or investments. Operational resilience ensures continuity even under stress.
Regulatory Expectations
The FCA and Prudential Regulation Authority (PRA) require firms to demonstrate resilience planning and governance across their operations.
Financial Stability
Major disruptions can spread across borders. By embedding resilience, firms reduce systemic risks.
Cyber Security Alignment
Operational resilience integrates closely with cyber resilience, ensuring firms can withstand and recover from attacks or data breaches.
Regulatory Frameworks For Operational Resilience
Operational resilience is embedded in multiple regulatory frameworks across the UK, EU, and international bodies.
United Kingdom
The FCA and PRA require firms to identify important business services, set impact tolerances, and test their ability to remain within these tolerances under disruption.
European Union
The Digital Operational Resilience Act (DORA) harmonises resilience requirements for financial institutions across the EU, including cyber security, third-party risk, and ICT governance.
Global Standards
The Bank for International Settlements (BIS) stresses that operational resilience is a critical element of supervisory expectations, linking it to risk management and financial stability.
Key Components Of Operational Resilience
Firms must take a structured approach to ensure resilience across all operations.
Identification Of Critical Services
Firms must determine which services are most important to customers, regulators, and the market.
Impact Tolerances
Defining the maximum tolerable disruption for each critical service is central to resilience planning.
Scenario Testing
Firms must test their ability to remain within tolerances during severe but plausible scenarios, such as system failures or cyber-attacks.
Governance And Accountability
Boards and senior management are responsible for resilience planning, with clear accountability for oversight and reporting.
Third-Party Risk Management
Given the reliance on outsourcing and cloud providers, firms must assess resilience across their supply chains.
Challenges In Building Operational Resilience
While essential, operational resilience presents practical challenges for compliance teams.
Complexity Of Global Operations
Cross-border firms must align resilience frameworks with multiple regulatory regimes, each with different expectations.
Cost And Resource Constraints
Building resilience requires investment in systems, staffing, and testing. Smaller firms often struggle to meet the same standards as larger institutions.
Data And System Fragmentation
Legacy systems and siloed data make resilience planning difficult. Institutions must modernise infrastructure to ensure visibility and control.
Human Factors
Resilience is not purely technical, staff awareness, training, and decision-making play critical roles in crisis response.
Best Practices For Operational Resilience In Compliance
Firms can strengthen their resilience posture by embedding resilience into governance and compliance processes.
Adopt A Risk-Based Approach: Prioritise resilience efforts on the most critical services and highest risks.
Leverage Technology: Platforms such as FacctGuard (for transaction monitoring) and FacctShield (for payment screening) can integrate resilience into AML functions.
Regular Testing: Run scenario-based exercises to validate resilience frameworks.
Board-Level Oversight: Ensure senior management owns resilience strategies and reports outcomes to regulators.
Continuous Improvement: Learn from incidents and adapt frameworks to evolving risks.
The Future Of Operational Resilience
Operational resilience will continue to expand as a regulatory priority. Trends include:
Stricter expectations around third-party and cloud service resilience.
Integration of cyber resilience and operational resilience into a single regulatory framework.
Greater supervisory use of stress testing and scenario simulations.
Expansion of resilience requirements to fintechs, payment firms, and crypto service providers.
As digital finance grows, regulators see operational resilience as essential for maintaining trust and stability. Firms that fail to prioritise it risk fines, reputational harm, and loss of regulatory approval.
