Operational Resilience: Financial Services & The Armed Forces

The Bank of England has defined Operational Resilience as “The ability of firms and the financial system as a whole to absorb and adapt to shocks, rather than contribute to them”. This definition will resonate well with the Armed Forces which is of course no stranger to crisis management – following that definition this is their bread and butter.

Similarly there is a responsibility on both sides – the nation has put its trust in the Armed Forces not only to defend it in times of conflict (hot and cold), but also to contribute to peacekeeping, assisting in times of natural disaster or even as we have seen, a global pandemic. There is a national responsibility. In the same way much of our GDP is reliant on Services and in-particular Financial Services. Banks are still repaying the tax-payer following the Financial Crisis and the way they look to address the challenges “absorb and adapt to shocks”, brought about by operational failure, will have a direct effect on the economy and Vis-à-vis, our pockets! Both the Armed Forces and Financial Services have a responsibility to the public.

Having spent over 13 years serving in the British Army and the best part of decade recruiting across end-to-end resilience, I have had considerable exposure to both areas. Before Financial Services looks to take on and adapt to endless more regulation, produce endless more policy, have endless more boxes to tick, now may be a good time to stop, pause and consider how the Armed Forces would do it. I have attempted to identify a few areas that I believe are embedded into the culture of how the Armed Forces think and act. In order to build a strong culture around resilience, I think there are lessons to be learned here and after all, the analogies of being ‘at war’ and ‘fighting an enemy’ in response to Covid-19 have also been endless.

MISSION STATEMENT: The Armed Forces rarely does anything without a mission statement. It needs to be short, punchy, and easily understood. It needs to be referred to constantly and EVERYONE needs to be aware of exactly what the mission statement is. The question, “does this contribute to the mission statement?” needs to be asked at every corner and if not, tough decisions need to be made. Having a clear, simple and succinct mission statement will assist in prioritising, overcoming internal conflict and will assist an organisation and in particular the leaders within it, to steady the ship by always asking the question – does this contribute to the mission statement?

CORE VALUES: Values in Financial Services have always been a bit wishy washy right? Do you work in FS and are you are aware of your company’s core values? Do they align with your own? The Values of the British Army are:

• Courage
• Discipline
• Respect for Others
• Integrity
• Loyalty
• Selfless Commitment

In the Army Leadership code, they are "much more than words on a page, they are what the British Army stands for, and what sets us apart from society". They are embedded in the very ethos of the British Army and, like a Mission Statement, offer direction in the way individuals at all levels behave and make decisions. At a time when a nation’s economy is very dependent on Financial Services and getting Operational Resilience right, it is time to value values and for leaders to truly align their workforce.

LEADERSHIP: Very much linked to the above, leaders need to follow the Mission Statement and display and promote Core Values. The Army Leadership Code identifies 7 leadership behaviours:

• Lead by example
• Encourage thinking
• Apply reward and discipline
• Demand high performance
• Encourage confidence in the team
• Recognise individual strengths and weaknesses
• Strive for team goals

Organisation could do far worse than to follow and embrace these or develop their own which, like Core Values, truly become part of the company culture. Above all however, MISSION COMES FIRST! Leaders need to be resilient and need to be able to make tough decisions in accordance with the mission statement. They need to have the Courage to make these decisions in a timely manner. The Integrity to make them for the right reasons and the Discipline to keep focus on the short, medium, and long term at the same time.

RESPONSIBILITY/ACCOUNTABILITY: Accountability, individual and mutual, is of crucial importance and an area in which again, Financial Services could do far worse than learning from the Armed Forces in. People are accountable for themselves and others from the most senior General to the most junior Private. Mistakes can cost lives and someone falling asleep on watch, making an error on a grid reference, or not spotting wires protruding from the ground when conducting a quick perimeter check in a hostile environment, can have catastrophic consequences. Everyone has a sense of accountability and this should be mirrored in Financial Services when considering Operational Resilience – it is everyone’s duty to feed into being resilient. Having a sense of accountability needs to be part of an organisations culture and is born from strong top down leadership.

COMMUNICATION:  I worked for many years within British Army Intelligence. The Intelligence Cycle/Process is ingrained into any Intelligencer’s way of working. It is a continual cycle that assists in informing strong decision making based on credible Intelligence.

The Intelligence cycle is a closed loop where feedback is communicated to the decision maker, the requirements may be revised, and the cycle continues. Good communication is essential, with every stage being evaluated. At the dissemination phase in particular the questions are asked: Is this information being communicated at the right time? In the right format? To the right people? By the right medium? Considering these questions and this continuous cycle when approaching Operational Resilience & Non-Financial Risk, may allow for more forward-thinking progressive conversation. A policy/procedure/process that nobody reads or that is difficult to digest or is disseminated to the wrong person is just paper. It needs to be appropriate and easily actionable.

SUMMARY

Of course it is easier said than done but if organisations could take a pause rather than chasing and appeasing the next set of regulations (of which there will be many over the coming months and years) following this pandemic and look to embed a culture based on at least some of the inherent characteristics of the Armed Forces, it may just lead to an enhanced ability to do something that is synonymous to the military in times of crisis…getting s**t done!

Thank you for reading,

Allister

Founder & Director - Bletchley Search & Selection