Redefining resilience: how COVID-19 will affect business continuity in the financial services industry

about 1 month ago Willow Oxford

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​In the midst of the COVID-19 pandemic, the financial services world is experiencing its biggest shakeup for many decades. Willow Oxford, Consultant in Investigo’s Risk team, spoke to her market about the possible effects of the current crisis, and how financial services firms are coping from a resilience and business continuity planning perspective.

How will the COVID-19 outbreak shape resilience frameworks and business continuity planning for financial services firms in the future?

It has certainly made everyone totally aware of the meaning and importance of resilience. Previously it was seen by some outside of the risk environment as a bit of an add-on to existing business continuity and disaster recovery, and in truth something that the regulator is driving. In the current situation, people now get the importance of being able to keep critical services running, both customer-facing and internal. They understand they need a holistic view that looks at more than just business continuity and disaster recovery plans, allowing operations to continue functioning should an office or IT system not be available. It also needs to consider how to keep the necessary number of people working to provide these services, including any outsourced staff.

Interestingly though, the exercise has shown that rather than working out different contingencies for different activities (e.g. split locations, transferable people) the ultimate solution for almost all eventualities is the ability of critical services, and indeed the whole firm, to work from home. Other actions help and may be more sensible immediate responses should specific areas, offices or systems go down, but the ability for all to work from home is the only firm-wide response.

What will be the immediate and long-term effects of COVID-19 on the role of risk management for UK financial services firms?

The short-term effect was to focus attention and importance on the concept of resilience. This focus can only remain in companies’ long-term thinking. In the future, organisations will be much more serious in assessing black swan events and will prepare for them much more effectively. Overall, the importance placed upon holistic risk management and CROs (hopefully!) will increase significantly.

How well prepared was the industry for an event like this?

Difficult to say. At one level, not particularly prepared as the risk of pandemics had dropped off most risk registers in recent years, and operational resilience was not given the attention it should have been (see first question). However, the truth is most firms have kept the lights on and so the response has been appropriate, although it could have been done in a more accelerated way if businesses had been better prepared.

“We felt very early on that being able to work from home was the core solution, and we got the capability to do that as a priority – in February, we went from 1500 to 7000 people being able to work from home. We focused on our outsourcers also developing such capability, which meant we could secure the required kit and infrastructure more easily than those who followed.”

Chief Risk Office, Global Asset Management Group

What do you think the effect of COVID-19 will be on agile working in financial services firms moving forward?

The use of agile working in financial services firms will only increase, for three reasons:

1.The experience of focusing on delivering a key objective (getting everyone able to work from home) in a short timeframe showed how we can deliver specific tasks very quickly when everyone’s focused on that.

2.We know that we can think of ways of cutting through large projects to get one simple solution.

3.The effectiveness of working from home shows that we can easily set up virtual teams of the best people for a task.

Willow specialises in building non-financial risk teams across both the first and second lines of defence within financial services. As non-financial and operational risk comes under increasing scrutiny from PRA (Prudential Regulation Authority) and FCA (Financial Conduct Authority) regulations, the importance of a robust and well-resourced first and second line risk function to provide oversight on business and risk activities has never been more important.

If you want to find out more about how you can protect your business in these uncertain times, or you’d like to talk to us about finding your next risk hire or risk job, get in touch now.