QUESTION:  What is Operational Resilience?

It is a big question, as an organisation it is thought of as the ability to adapt, respond and recover to market disruption. It is a different and newer way of thinking about risk.

For a long time, institutions would think of risk as purely financial risk and now they need to think about how adaptable they are and how able they are to respond to and recover from crises.

Regulatory requirements around resilience is an evolving area in the US, requirements are much more clearly defined in the EU.

European regulators have put out consultative papers and documents that define requirements for big banks on what they need to do to be resilient, including scenario planning and testing, defining process mapping, end to end processes and seeing where single points of failure are.

From a US perspective, regulations have been more principal based, but it is an area of increasing focus for the FED and we will see some sort of guideline come out in the third quarter of 2020.

QUESTION: Who is accountable for Resilience?

Accountability sits within the first line. There is a Chief Resilience Officer who is a senior member of staff, an Executive VP, who reports into the COO.

The Chief Resilience Officer owns the resilience program plus the BCM program. They manage a fairly sizable team.

Second line oversight of resilience is shared across risk and compliance. The third line will come in to review what the others are doing but there is no specialised resilience focused audit team.

QUESTION: What roles have you created or changed?

There has been external hiring and internal moves.

A new Head of BCM has been hired from the external market and there are still a number of additional hires to make.

They have grown their third party/vendor management team and external hires have ben made as well as moving people internally into the team. The function is now 80 people but was previously very small.

There has also been hiring in the second line.

QUESTION: What skill sets are in demand?

People that have good understanding of operations and can understand where there are potential challenges or weak points are in demand.

Communication is key, even if you have the best plans you need to be able to communicate what the risks are up to the senior level of the organisation. You must be able to effectively talk up and down within the firm.

Companies are going to look at people who successfully weathered this and can share best practices. Organisations will be constantly talking to peers about what they’re doing.

Those that are adaptable, can use their imagination and think the impossible and start to plan for it will be in demand.

QUESTION: What have you learnt from COVID-19?

Despite holding up reasonably well, one thing we learned is that as organisation we have been too light on thinking through worse case possible outcomes. There are a number of things that have been thrown up by the current crisis that we hadn’t contemplated.

We have previously been very focused on global plans and approach but have now realised that there is a need for strong people in each region because governments globally are not reacting in the same way to the crisis.

To effectively navigate this crisis, organisations really needed to adapt to different government mandates and reactions in different regions. A couple of senior, influential people are needed in each key location.

INTERVIEW END

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Leathwaite recently executed a series of interviews with global heads of Risk to understand how organisations across all sectors have been implementing crisis plans.

Since lockdown began, organisations across all sectors have been implementing crisis plans. We were keen to understand what financial services firms globally had put in place over the last year; since regulators, particularly in the UK, began to make stipulations around process mapping, understanding of impact tolerances and running increased scenario testing.

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