Since 2008, economic shock after shock focused regulators on initiatives to shore up the overall resilience of financial firms and reduce the impact of systemic interdependencies. Regulation dedicated to ensuring firms had sufficient capital requirements and were able to report their activities appropriately took much of the industry’s attention. However, even prior to the onset of the Covid pandemic, regulators had begun to focus on the thorny issue of how to bolster firms’ operational resilience. Regulators and standards setters in various regions began laying out what is expected of firms in respect to their operational resilience policies and processes, and significant progress has since been made over the last three years. While that progress is mostly consistent from region to region, divergence can be an issue for firms that operate across multiple regulatory jurisdictions. The significant degree of regulatory activity relating to operational resilience in the first half of 2022 is a call to action for firms to update – or create – their operational resilience practices and policies.
The globally integrated financial world with its cross-border service delivery interdependencies, means that the resilience of a firm’s services in one jurisdiction may depend heavily on the supporting assets or processes located in other jurisdictions where regulation may differ. Assessing the feasibility of a multi-jurisdictional approach to operational resilience requires firms to understand the full extent of the demands that these emerging region-specific regulatory requirements will place on them and the consequential impact that the requirements will have on their strategies and business models.