With the March deadline for complying with the regulatory authorities’ first set of Operational Resilience requirements now behind us, the Bank has conducted a preliminary assessment on submissions it has received. In the webinar David discussed some of the themes that have emerged so far. He also provided listeners with some insight into how the Bank views the progress firms have made in identifying their important business services (IBS) and setting impact tolerances. 

Overall, the Bank believes there has been positive progress made against expectations. However, the review revealed that while most IBS submitted by firms had an impact tolerance set for customer harm or market integrity, relatively few appeared to account for safety and soundness or financial stability measures. David emphasised that one IBS may have several different impact tolerances. He added that where impact tolerances have not been set for all areas, the BoE expects firms to at least consider if these are applicable as a matter of priority. 

David and his team also noticed a wider variety of outcomes than expected when it came to the granularity with which important business services were identified. As the operational resilience policy requirements are principle-based and emphasise taking a ’proportionate‘ approach tailored to the needs of each individual firm, methods of execution were always expected to vary somewhat. However, the Bank has stated that it expects that the divergence in outcomes so far noted will narrow over time. It anticipates that UK Finance will play an important role in facilitating communication between regulated firms to achieve this. 

Over the next few months David and his team will be looking in more detail at March submissions and sharing any insights. We will be getting in touch with member firms in the coming weeks to discuss how we can work towards building the consistency in approach that the Bank is asking for. We look forward to working with our members and regulators as we mature the application of operational resilience policy and drive further collaboration throughout the transition period to 2025. 

For more detail on the BoE assessment, please see David Bailey’s speech here. If you missed the webinar, you can view the recording here.