Thursday 1st October was the final deadline for the financial services sector to respond to a consultation paper on operational resilience prepared by the Bank of England and FCA. The regulation, expected to come into force in 2022, was prompted by concerns over the tolerance levels in the financial system in the wake of high profile cyber-attacks on Eurofins and Tesco Bank, as well as disruption resulting from TSB’s IT upgrade.
The proposed regulation stipulates that financial services companies map the business services that, if disrupted, could cause harm to consumers or market integrity. This covers the supporting people, processes, technology, facilities and information. Further it will mandate that these organisations ‘set impact tolerances for each of these services and test their ability to remain in tact through a range of severe but plausible disruption scenarios.‘
Although it is an important moment for the financial service sector specifically, companies in all industries should review the proposals and start taking the necessary steps to comply. Not only will the regulation be adopted by more sectors over time, but the best practices it encourages are critical at a time in which COVID-19 has exposed the lack of operational resilience in many UK businesses.
As an example, if you called a company’s customer service helpdesk in the first six weeks of the UK lock down, you were greeted with a strikingly similar message – “we’re experiencing an unusually high volume of calls.“ In most instances this excuse was completely fictitious. In reality these firms simply did not have the back up plans in place to cope if members of staff were not able to physically travel to their call centre.
Before attempting to build resilience plans, it is first essential to design and document the existing processes within your organisation, a foundational step that many have not yet taken. In smaller organisations and relatively simple processes, this can be done manually by bringing together the relevant individuals to discuss and document the process.
However for enterprise organisations, which typically take a siloed approach to process design, a better solution is leveraging automated process mining technology. These platforms generate actionable insight into processes that allow companies to optimize day-to-day operations and make smarter decisions, faster. In addition, they can identify the root causes of poorly performing processes by detecting and visualizing compliance violations, monitoring process performance and acting on critical cases and performance bottlenecks.
When it comes to process design, start with the most critical processes first and get into a rhythm of designing, simulating and documenting them in line with the organisations value stream and value chain. One of the biggest reasons that most companies haven’t already taken steps to map their processes is because of the sheer (perceived) size of the task. Break the problem down, and prioritise the mission critical processes first.
When it comes to resilience planning, it is important to interrogate the practicality and viability of your initial blueprints. Even in a crisis, you need to be sure that your organisation is following the most resource and cost-efficent process possible. This due diligence also accelerates the process of getting these plans approved across the company and signed off by senior leadership. Today’s process software solutions can help you automatically simulate and stress test the impact that the plans will have across the organisation.
Finally, even companies that have successfully mapped their processes and built their resilience plans often fall into the trap of leaving them in a draw somewhere to gather dust. A better approach is to document and store the resilience plan on a platform that can serve as a ‘single source of truth’ for the whole organisation. This will significantly improve your ability to audit and, if required, demonstrate compliance to the regulator. Then take proaactive, positive steps to regularly cascade the information through relevant teams in as many different ways as possible.
In the course of day to day business, it is always tempting to put off process design and resiliency planning and focus on the daily grind. However, COVID-19 has taught us that the unexpected does happen. Next time make sure your organisation comes out ahead of the pack.