Increased focus on operational resilience

A wide range of recent well-publicised risks to operational continuity, including but not limited to cyber threats, combined with seemingly more frequent natural disasters and extreme weather-related events have contributed to a broad, heightened interest in operational resilience, which features as an area of considerable focus for corporates and financial institutions, as well as the global regulatory community. This paper discusses the key principles of a strong operational risk framework that remain relevant even as technology and tools advance. These principles include a deep understanding of the businesses and activities that are of greatest operational importance and the specific resources required to execute them, the development and maintenance of business continuity and crisis management plans and the performance of robust testing that is designed to illuminate opportunities for improvement. Recent developments in the global regulatory focus and approach to operational resilience are discussed, including the important differences between regulators and the lack of a single set of universal rules. While this creates challenges for global firms, the authors discuss how the global Custody business and its related ecosystem has been demonstrating its resilience throughout the COVID-19 pandemic, highlighting the interdependency of the participants on each others' resiliency.