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CP 19/23: Building Operational Resilience: Impact Tolerances
Building Operational Resilience: Impact Tolerances for Important Business Services
7th January 2020
On the 5th December 2019, The Financial Conduct Authority (FCA), The Bank of England (the Bank) and the Prudential Regulation Authority (PRA) all published a shared policy summary as well as co-ordinated consultation papers (CPs) on new requirements to strengthen operational resilience in the financial services sector.
- CP19/23 - The FCA’s Consultation on Building Operational Resilience
For these three supervisory authorities, the establishing of operational resilience in firms and Financial Market Infrastructures (FMIs) is a shared priority and one which the co-ordinated Consultation Papers build upon, setting out the concepts for operational resilience (as previously discussed in a Discussion Paper published last year by the authorities) and addressing many of the proposed policy changes based on the responses they have each received since.
It is clear in the Policy Proposals that firms and FMIs are expected to “take ownership of their operational resilience” and that they will need to prioritise plans and investment choices based on their impacts on the public interest.
Also, should disruption occur, then firms are expected to communicate clearly, for example providing customers with advice about alternative means of accessing the service.
Under the proposals put forward by the regulators, firms and FMIs would be expected to:
- identify their important business services that if disrupted could cause harm to consumers or market integrity, threaten the viability of firms or cause instability in the financial system
- set impact tolerances for each important business service, which would quantify the maximum tolerable level of disruption they would tolerate
- identify and document the people, processes, technology, facilities and information that support their important business services
- take actions to be able to remain within their impact tolerances through a range of severe but plausible disruption scenarios
Andrew Bailey, the FCA’s Chief Executive stressed how “disruptive events can have a high impact on consumers and businesses, so firms and FMIs need to know where the risks to their service delivery lie and to make sure that they are prepared for any service disruption by testing their planned response”.
Responses to the FCA’s Consultation Paper (CP19/32 ‘Building operational resilience: impact tolerances for important business services’) should be received before the closing date of 3 April 2020.
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Comment from FCA
“It is in the public interest that a resilient financial system is able to supply the most important services with minimal interruption even during severe operational events. The proposed new requirements are aimed at achieving this outcome.”
Mr Andrew Bailey, FCA Chief Executive, December 2019
