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The importance of Operational Resilience in the U.S. financial sector.

Operational resilience is a critically important topic for the financial sector. It refers to a financial institution’s ability to withstand and adapt to disruptions such as cyberattacks, natural disasters and pandemics while continuing to provide essential services to its customers and meet regulatory obligations. We have recently highlighted regulatory activity in the UK and APAC, however governing bodies worldwide are drafting their own equivalents or adding new legislation to extend and enforce existing regulations.

The U.S. is no exception with all three federal banking regulators simultaneously issuing the Supervisory Letter SR 20-24: Interagency Paper on Sound Practices to Strengthen Operational Resilience to the officer in charge of supervision at every federal reserve bank in November 2020. Although the practices outlined in this initial letter were directed to the largest and most complex domestic US financial firms, it is important for all financial firms to strengthen their operational resilience as new directives are being drafted for many additional FINSERV jurisdictions. Operational resilience remains a top priority for regulators as illustrated by the inclusion of Information Security and Operational Resiliency within the 2023 Examination Priorities announced by the U.S. Securities and Exchange Commission.

Cristie Software has broad experience working with financial institutions to deliver automated large scale system recovery with the ability to orchestrate detailed recovery simulations and support the self-assessment requirements of regulatory compliance. Of course, operational resilience has implications extending way beyond meeting regulatory compliance. Below we highlight 10 key areas that illustrate how important improving operational resilience is for all firms in the U.S. financial sector.

10 key reasons why Operational Resilience is crucial in the U.S. financial sector:

  1. Protecting Customers and Investors: Financial institutions handle the money and investments of individuals and businesses. Operational failures can result in financial losses for customers and investors, erode trust, and damage a financial institution’s reputation.

  2. Maintaining Market Stability: The financial sector plays a central role in the stability of the broader economy. Disruptions in financial operations can have cascading effects on other sectors, potentially leading to systemic crises.

  3. Regulatory Requirements: Regulatory agencies impose strict requirements on financial institutions to ensure they have robust operational resilience measures in place. Non-compliance can lead to fines, legal consequences, and reputational damage.

  4. Cybersecurity Threats: Financial institutions are prime targets for cyberattacks. Operational resilience includes cybersecurity measures to protect sensitive customer data and financial systems from breaches and cyber threats.

  5. Complexity of Financial Services: The financial industry is highly complex, involving various products, services, and interconnected systems. Ensuring operational resilience is a way to manage this complexity and reduce the risk of operational failures. System recovery following any disruption will need to be orchestrated to ensure complex tiered systems are recovered in the correct sequence. Cristie System Recovery automation and orchestration tools can help to facilitate system recovery within complex financial systems.

  6. Customer Expectations: In the digital age, customers expect uninterrupted access to financial services. Operational resilience is crucial to meet these expectations, especially with the increasing reliance on online and mobile banking. Customer Experience (CX) is a major area of focus in the competitive FINSERV market.

  7. Global Interconnectedness: Financial institutions often operate on a global scale, making them vulnerable to disruptions in different parts of the world. Operational resilience helps mitigate the impact of global disruptions.

  8. Legal and Regulatory Reporting: Financial institutions are required to report their financial status and operations accurately and transparently. Operational resilience ensures that they can fulfil these reporting requirements even in challenging circumstances. Cristie Recovery and Replication software provides detailed reporting to assist with regulatory self-assessment plus the ability to perform regular recovery simulations to validate disaster recovery processes and recovery time expectations.

  9. Competitive Advantage: Institutions with strong operational resilience can differentiate themselves in the market. Customers and investors are more likely to trust and do business with institutions that demonstrate a high level of resilience.

  10. Risk Management: Operational resilience is a fundamental aspect of overall risk management in the financial sector. It helps identify, assess, and mitigate operational risks effectively.

Learn how Cristie Software can simplify Operational Resilience for the U.S. financial sector.

In summary, operational resilience is a foundational element of the U.S. financial sector. It encompasses strategies, processes, and technologies designed to ensure that financial institutions can continue to operate effectively and protect the interests of their stakeholders in the face of various threats and disruptions. It’s not just a regulatory requirement; it’s a key component of business continuity and long-term success in the industry. Contact our team to learn more about simplifying key aspects of your system recovery to help meet the requirements of operational resilience legislation. Visit the CloneManager® and System Recovery product pages for more information regarding the Cristie Software suite of solutions for system recovery, replication, migration, and ransomware protection.

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