July 05, 2018

BoE, FCA, and PRA jointly published a discussion paper on strengthening the operational resilience of financial services (FS) firms. The discussion paper is intended to share the thinking of supervisory authorities regarding operational resilience and obtain feedback. Responses should be submitted by October 05, 2018.

The paper explains why the supervisory authorities consider that managing operational resilience is most effectively addressed by focusing on business services, rather than on systems and processes. It also explains that financial stability rests on the operational resilience of individual firms, financial market infrastructure (FMI), and the system as a whole. The paper then suggests that the boards and senior management of firms and FMIs would set their own tolerances for operational disruption, on the assumption that that some or all supporting systems and processes will fail. Next, it expands the idea that firms and FMIs would develop impact tolerances for important business services; it explains how supervisors could gain assurance that firms and FMIs ensure the continuity of their most important business services and that boards and senior management are sufficiently engaged. Finally, the paper summarizes some of the key concepts set out in the discussion paper and provides a complete list of the discussion questions.

Operational disruptions to the products and services that firms and FMIs provide have the potential to cause harm to consumers and market participants, threaten the viability of firms and FMIs, and cause instability in the financial system. The discussion paper focuses on how the provision of these products and services can be maintained. Operational resilience refers to the ability of firms, FMIs, and the sector as a whole to prevent, respond to, recover, and learn from operational disruptions.

 

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Comment Due Date: October 05, 2018

Keywords: Europe, UK, Banking, PMI, FMI, Operational Resilience, Business Continuity, FCA, PRA, BoE

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