Boosting your operational resilience for the new normal

Morris Naqib
Director, Finance Risk and Regulatory Transformation, PwC Switzerland

While operational resilience has been on the regulators’ agenda over the past couple of years, the global pandemic and recent geopolitical uncertainties have rapidly made the issue more relevant to Swiss financial institutions. In this paper we review the key trends impacting operational resilience, how the macroeconomic situation is shaking up established beliefs around operational resilience, and what exactly your company can do to prepare itself against uncertainty.

Trends impacting operational resilience

Emerging or growing trends are challenging financial institutions to upgrade their traditional operational resilience framework to a more strategic and holistic approach. Learn more how this may affect your company:

Clients’ shift towards digital channels, products and services

Although customers have been drawn towards digital channels and the adoption of new technologies in the last few years, the global pandemic has massively accelerated this trend.

New ways of working and agility

Due to the global pandemic, most employees have become accustomed to working from home and are demanding the flexibility to do so in the future.

Multiplication of third parties’ involvement

Various financial institutions are bundling their services together to offer customers an entire ecosystem of financial services, including banking, insurance and brokerage services.

Increased regulatory focus

With the growing need for financial institutions to absorb operational risk-related events in order to remain financially resilient, regulators increasingly consider operational resilience to be equally significant as financial resilience.

Focus on the post pandemic new normal

The global impact of the pandemic and the Russian invasion of Ukraine leads to new worldwide dynamics, forcing Swiss financial institutions to re-think what is considered as "normal".

Borders matter again

With the global pandemic, we saw the resurgence of the importance of local differences in terms of policies and cross-border travel limitations. This affects business as usual activities at the forefront, but also puts back-up activities at risk, triggering the need to rethink the organization within individual countries and sometimes even within individual regions.

Macroeconomic uncertainties are getting closer

With the large-scale military assault of Russian forces on Ukraine, operational disturbances are challenging Swiss financial institutions in the short term, while in the long term, the fear of the conflict expanding to other countries and its economic consequences is increasing.

The role of crisis management is evolving

The succession of lengthy crises of different natures highlights that uncertainty can endure for an indefinite amount of time. This confirms that crisis management is a critical key capability as these challenges require not only coping mechanisms to survive but also to continue operating the business sustainably.

The workforce is developing new needs

The workforce has gained mobility from a geographical perspective and has grown accustomed to this new-found flexibility. This can nonetheless challenge the foundations of the firm’s culture.

What is next for you?

Leading financial institutions have already taken up the challenge of assessing and improving their operational resilience capabilities. These institutions have recognised that operational resilience is not only about dealing with the problems of today, but more so the need to embed a culture of resilience across the company. The following four building blocks have been identified as key to support your for operational resilience in facing market trends and paradigm shifts:

Data resilience: protect and leverage your data.
Sourcing and external dependencies: put third-party risk management at the centre of your ecosystem thinking.
Cyber resilience: anticipate adverse cyber events, and develop detection, response and recovery capabilities to manage a cyber incident.
Digital resilience and service operations: build a sustainable competitive advantage with resilience embedded at the core of your operating model.