Operational Resilience

With growing concerns about cyber threats, operational risks, and complex geopolitical dynamics, the FCA is pushing firms to enhance their operational resilience. This initiative builds on lessons from the COVID-19 pandemic and includes preparations for meeting operational impact tolerances by 2025.

The FCA is actively assessing firms’ capabilities to withstand disruptions and maintain continuity

FCA Focus on Operational Resilience

The UK's Financial Conduct Authority (FCA) is intensifying its focus on operational resilience, an area that has gained significant importance following the disruptions caused by the COVID-19 pandemic and the increasing threats from cyberattacks.

This policy aims to ensure that financial firms can withstand operational disruptions and continue to provide essential services without significant impact on consumers or financial stability.

What Does This Mean for Firms?

Firms will need to invest heavily in strengthening their operational systems, including technology infrastructure, cybersecurity defences, and crisis management processes. The FCA expects companies to assess and improve their resilience against a wide range of scenarios, including cyber incidents, supply chain disruptions, and other operational risks.

Firms are required to identify their important business services and set impact tolerances—thresholds for the maximum level of disruption they can withstand. They must then develop, test, and demonstrate their ability to remain within these tolerances under various stress conditions.

Timeframes and Compliance Deadlines

The FCA has set a clear timeline for firms to enhance their operational resilience. By 2025, firms are expected to fully implement these measures and be able to demonstrate their preparedness to the FCA. Regular assessments and updates will be part of this ongoing process, with firms needing to continuously adapt to emerging threats and evolving best practices.

Penalties for Non-Compliance

Firms that fail to meet the FCA's operational resilience standards risk facing severe penalties, including fines and restrictions on their operations. The FCA has emphasised that it will not hesitate to take enforcement action against firms that do not adequately protect their operations and, by extension, their customers.

In summary, the FCA's Financial and Operational Resilience policy demands significant effort from firms, requiring them to proactively invest in and maintain robust systems to manage and mitigate operational risks. Firms that fall short of these expectations could face substantial penalties, underscoring the importance of compliance.

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