The State of Operational Resilience in 2024

During the second half of 2024 myself and my colleagues working in ARIS on Op Res got to spend time with around 10 to 15 regional and global banks and insurance companies as we explored the development and refinement of their Op Res frameworks.

Going to try and capture a couple of my own observations on the space in this article - very much my take on what I learned and contributed. No customer names will be used and nothing to identify them will be shared.

1. Dec 2024 status summary

Its a work in progress (inevitably). Every single FSI customer has taken pragmatic decisions to balance out a comprehensive approach versus getting working streams completed in time for the relevant deadlines.

By the end of the year the majority had already began to plan for tackling some of the big remaining pieces in 2025.

2. The people

After a number of engagements we started to expect that the people we would be working with would come from either a Business Continuity or Operation Risk background. Probably 80% of them were one or the other with the European teams also likely to have IT architecture experience too.

In every case experienced and extremely capable individuals and teams are experiencing steep learning curves (and enjoying them in most cases!) as they stretch from a silo'd view of operations into an end to end and cross functional one.

3. Key Challenges

a) Semantic alignment

In a conversation with a Forrester analyst last week he captured one of the key challenges eloquently. My "data schema's are all over the place magically became "a lack of semantic alignment"

This one was pervasive, it is so difficult to establish a consistent and accurate holistic view of your end to end service delivery when the data schemas across all relevant platforms don't align on key data fields or more fundamentally on their definition of the foundations of an Op Res framework. Understandable as there have been very few operational reasons to achieve something which is a heavy and non-trivial piece of work in every single platform instance.

To give a practical example closer to our hearts here you could easily find that the loose concept of a process is used in 3 separate platforms but it is not defined consistently so not a single process can be found in common across the 3.

Looks like 2025 and 2026 will be the time in which that semantic alignment will slowly creep in.

b) Third Party

Given the challenge above you can begin to appreciate the challenge of incorporating information and data on your third party dependencies as you try to gather it from various platforms and sources and then add it in a logical way to the holistic view you have cobbled together.

Once you have achieved that the management of the related third party risks and associated controls kicks in.

Coming up in the next two years will then be collaborative scenario testing including third parties.

This will make each company much stronger operationally but its messy!

c) Prove it, test it

With a sigh of relief and a lot of hard work put in banks, insurance companies and other relevant companies under the Op Res umbrella will submit in various ways their understanding of their Op Res status.

This will be challenged in two ways

Over time standardisation of the subjective decisions taken will be guided by regulatory authorities as they absorb the work done across the entire sector and begin the move to identify best practices.

In the shorter term they will expect the paper based exercises which have complied an academic understanding of service delivery and the related dependencies to be prioritised and rigorously tested at resource, process and IBS or Critical Function level.

The completeness and accuracy of those initial understandings will be challenged as companies work through that in stages and revisions to their initial Op Res compliance will be inevitable.

Interesting 2025 and 26 ahead. Thank you to the internal team I shared this learning curve with so far - Alba Grimm Karin Bruls Alain B. Matt Corby-Crate Jesper Loell Monika Leitner Koen Maes and Gabby who doesn't hang out on Linkedin ;-)

Keith

#ARIS #OpRes #DORA #OperationalResilience