UK financial system given high marks for resiliency
More than 60 of the UK's financial sector firms and financial infrastructure providers took part in the project and many of them helped in its planning and design. The survey aimed to answer the following questions: * How resilient is the UK financial sector? * How quickly could the sector recover from major operational disruption? * Do firms plan and prepare effectively? * Are there any concentrations or dependencies that could be potential areas of vulnerability? * What action is needed to improve the resilience or recovery capability of the sector? Encouragingly, the results indicate that core firms and financial infrastructure providers have highly resilient IT systems and can recover critical functions rapidly following major operational disruption. ‘Their preparedness stands the sector as a whole in good stead in terms of its overall level of resilience and recovery capability’, states the survey report. There are, however, several areas where there is scope for firms to improve their planning and preparation. ‘In particular, the sector would benefit by progressing from a strong but heavily IT-focused disaster recovery approach towards the adoption of more rounded business continuity principles’. As a result, firms are being advised to strengthen their business continuity arrangements by being ‘more outward-looking in their approach, collaborating with key third parties to bring about more co-ordinated planning, testing and risk mitigation. This will enable them to base their plans on fact rather than assumption and improve the market’s collective ability to recover in the event of a disruption.’ Crisis management is also seen as a weak area. The report says that ‘Firms also need to strengthen their crisis management arrangements, particularly as they relate to staff.’ In terms of concentration risk and dependencies, the results confirm that the financial system is heavily dependent on IT and that, although IT arrangements are very resilient, there is a heavy geographical concentration of primary and recovery sites in and around London. Follow up work by the tripartite authorities will explore this issue: ‘We need to understand more clearly how firms can mitigate this risk, for example by being able to switch business to offices with a low likelihood of concurrent disruption. The data also confirms a high degree of reliance on financial infrastructure providers, on British Telecom and on recovery service providers for back-up workspace. These concentrations are not unexpected but firms and providers could do more to increase transparency over information and co-ordinate more closely on planning and testing’, says the report. The benchmarking results for individual firms indicate significant variations in business continuity standards between participants. Several participants have described the exercise as a ‘wake up call’ in terms of improving business continuity teams’ understanding of their firms’ critical business functions. Hector Sants, managing director of the FSA's wholesale firms division, said: "It is encouraging that the project has established that the core parts of the financial system appear to have highly resilient IT systems that allow them to recover critical functions with impressive speed. This stands the sector as a whole in good stead and confirms to us that we do not at this stage need to write detailed rules telling firms what business continuity arrangements they should adopt. "Several participants have described this exercise as very helpful in terms of improving business continuity teams' understanding of their firms' critical business functions. This is a welcome development but highlights that firms need to do more to ensure that business continuity staff are sufficiently aware of the business functions they are supporting. "Almost all participant firms have already indicated that they are planning to make changes to their business continuity arrangements as a result of what they have learned from the project. We will aim to build on our existing approach of identifying what constitutes good practice and sharing this with firms." Each participating firm has received a detailed individual benchmarking report. A detailed summary of the research can be found here.
•Date: 15th Dec 2005 • Region: UK • Type: Article •Topic: Financial sector BC |
