Financial institutions are more sophisticated than ever, from the products they provide, the regulatory environments they swim in and the fortitude of their internal infrastructures.

Yet, they remain exposed to uncertainty as much as they allow themselves to be. Operational resiliency not only refers to an organization’s ability to operate effectively and maintain critical functions in the face of disruptive events but it also describes a corporate culture where it must be absolutely OK to raise issues. Everything has a time component, which means everything carries a cost.

Operational Resiliency is just as much about the people who run an organization as it is about the data identified by that organization. You need to be able to ask questions about the level of your resilience before you undergo difficult days so that you have internal routines to address the findings.

Further to this, organizations must demonstrate to regulators they have the frameworks to proactively manage themselves. Using the right approaches, these frameworks will create connectivity inside an organization where the client, the firm, and the regulatory lenses are used to organize conversations so that people, platforms and priorities are understood by everyone.

This mindset is nothing new. Let’s refer to the philosopher Aristotle who wrote at length about risk as the ancient Greeks sought to build and codify their society into early attempts at civilization.

Aristotle marvelled at how the human condition is characterized by chance, probability, uncertainty, and unpredictability. He recognized our survival depended on abilities such as practical wisdom and capable decision making.

What does it all mean?

In order to make progress in operational resiliency, it is essential to make a commitment to outlining the understanding of best practices, or establish where you have gaps. Above all, Aristotle highlights the virtue of good judgement which requires considering potential risks and avoiding unnecessary danger.

Good judgement encompasses combinations of principles and assumptions which allow organizations to prepare for external disruptions and minimize the impact as best as the situation allows.

These principals also examine the internal uncertainties which often accompany these types of events. A starting principle might be that all activities have a financial impact, either in terms of pro-actively putting in solutions or via a post-mortem where an event has led to an unexpected financial outcome.

A starting assumption will show that there is an appreciation that reviewing the firm’s capabilities to become more robust and less brittle over time.

A strong COO group can lead these key discussions by identifying the persons who can engage on the important topics with operational resiliency across the differing business lines and, at the same time be inter-operable across the various lines of defence.