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Covid-19 has forced financial institutions to make quick and sometimes difficult decisions in the name of achieving business continuity. And with some of these decisions has come a new exposure to risk. Here we?ll look at what that risk is and how to avoid it.
Banks in the UK were not completely unprepared for this current situation. In December 2018 the Bank of England published Building the UK financial sector's operational resilience. A year later, the Financial Conduct Authority and the Prudential Regulatory Authority issued three further consultation papers on the topic.
The UK regulators sought to provide guidelines for firms and financial market infrastructures (FMIs) in facing 'threats such as natural disasters, terrorism, pandemics and cyber-attacks?. They stressed the importance of impact tolerance, risk management and business continuity planning.
Shortly after these inputs from the regulators, the Covid-19 pandemic began to inflict severe pressures on firms? operations. As participants in a recent British Computer Society (BCS) webinar pointed out, many companies and their employees have adapted with speed and agility to unprecedented change.
However, in achieving business continuity during the pandemic firms have become more exposed to risks such as occupational fraud and cyberattack. IBM's Julian Burnett said in the BCS webinar that 'the tech we?ve put in place to support remote work and collaboration are also bringing new risks, so I?m starting to see more investment in cyber-resilience?.
Throughout the global crisis this need to manage risk by striking a balance between security and continuity has been at the heart of both national and corporate governance.
In June 2019 UK Finance and EY co-wrote a response to the Bank of England's paper. It sought to ?advocate a more holistic and business-led approach to resilience? and stressed the need for ?building and maintaining trust with consumers and businesses?.
So how can firms design holistic models that are adapted to the new reality? And how can they secure relationships of trust with key stakeholders?
They should be transparent with their staff, communicating clearly, seeking employees? ideas on change and giving due consideration to their well-being.
They must innovate rapidly in the way they deliver services to customers and clients, drawing on their recent experiences to choose the most effective digital tools.
Such changes create challenges for firms in their relationships with third-party platform providers. We have observed in recent discussions with clients that overseas outsourcing, for example, is being carefully reassessed.
In an IT Today article Paul Taylor argues that 'supplier selection is now a key organisational capability?. A prime criterion is the supplier's company and cultural fit: ?do they operate in a way that works for you, both practically and ethically??
With firms and FMIs expected to meet exacting regulatory change requirements, it is essential to have reliable and well-supported tech platforms that are closely integrated with firms? overall systems and culture.
This applies to a range of digital tools, from cybersecurity applications to online confirmation platforms. They should be combined strategically to support the futureproofing of the UK's financial institutions. In a recent webinar with UK Finance, Brian Fox, founder of Confirmation and VP of strategic partnerships at Thomson Reuters, further explores the role of technology in future-proofing business.
Confirmation pioneered the idea of digital confirmations in 2000 and still leads the industry today. More than 16,000 audit firms, 4,000 banks and departments, and 5,000 law firms have put our platform to work. We span 170 countries and process more than one trillion dollars in confirmations each year.
Caroline Winch, Commercial Director, Confirmation, part of Thomson Reuters