Norton Rose Fulbright publishes “Global operational resilience and COVID-19” report
Global | Press release - Business | October 2020
A new report by global law firm Norton Rose Fulbright – “Global operational resilience and COVID-19” – reveals how international financial institutions are managing operational resilience in the wake of the COVID-19 pandemic.
A cross-section of senior executives and risk and compliance professionals from more than 50 international financial institutions responded to the survey, which focuses on seven headline areas:
- Governance and oversight
- Annual budgeting
- People and important business services
- Outsourcing and systems
- Regulatory change and guidance
- Key challenges and concerns
- Lessons learned
Whilst 38% of respondents felt their institution had moderately comprehensive operational resilience frameworks before the pandemic, the same proportion confirmed their framework was either “in development” or “in place but required improvement”. Consequentially, the pandemic has prompted a robust response from the financial services industry with 80% of respondents stating that their institutions now has enhanced governance and oversight due to the crisis.
Managing external stakeholders and third parties, IT connectivity, business travel disruptions, and supervision and oversight were four areas in which respondents had experienced challenges during the earlier phase of the pandemic.
In addition, respondents have identified conduct risk, cyber and data security, cash flow and profitability, and the impact of loan loss provisions as primary areas of systemic concern.
Correspondingly, respondents expect greater regulatory scrutiny and enforcement action to focus on controls and risk management frameworks, technology and management information, accountability regimes and financial crime risks.
Given the ongoing disruption caused by the pandemic, more than 70% of respondents expect that their organisations will increase their operational resilience budgets in 2021.
Lisa Lee Lewis, head of advisory for risk consulting at Norton Rose Fulbright, commented:
“The pandemic has prompted an institutional rethink on operational resilience. The question financial institutions need to ask themselves is: can the institution absorb operational shock when they do occur while continuing to provide the same level of services to its customers and relevant markets? Financial institutions will continually need to test their ability to remain within their impact tolerances through a range of severe but plausible disruption scenarios. These areas will be even more pertinent as and when new or enhanced rules come into force over the course of the year in countries across the globe.”
Jonathan Herbst, global head of financial services, Norton Rose Fulbright commented:
“The current pandemic has meant that firms’ contingency plans are being tested in real-time. It has incidentally prompted firms around the world to begin mapping, testing and strengthening their operational resilience frameworks, often in advance of the new or revised rules coming into force. Those firms who have generally responded well in this crisis will find that the initial groundwork for operational resilience has been laid.”
Register for the report here.
Read the firm’s recent insights on global operational resilience:
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