Operational Resilience
An organization's ability to prevent, adapt to, respond to, and recover from disruptions to continue delivering critical services.
Also known as: Business resilience, Organizational resilience
Category: Business & Economics
Tags: resilience, operations, risk-management, governance
Explanation
Operational resilience is the ability of an organization to deliver critical operations through disruption. It goes beyond business continuity and disaster recovery by focusing on end-to-end delivery of important business services, including all the people, processes, technology, and third-party dependencies involved.
**Key dimensions of operational resilience**:
- **Anticipation**: Identifying potential disruptions before they occur through threat assessment, scenario planning, and horizon scanning
- **Prevention**: Implementing controls and safeguards to reduce the likelihood and impact of disruptions
- **Adaptation**: Adjusting operations in real-time to respond to changing conditions
- **Response**: Executing predefined plans to manage disruptions when they occur
- **Recovery**: Restoring normal operations and learning from the experience
**Operational resilience vs. business continuity**:
- Business continuity focuses on recovering specific functions after a disruption
- Operational resilience takes a broader view, focusing on the end-to-end delivery of critical services and proactively building the capacity to absorb disruption
- Operational resilience considers the full ecosystem, including third parties and supply chains
**Building operational resilience**:
1. Identify and map critical business services
2. Set impact tolerances for disruption to each service
3. Map dependencies (people, processes, technology, third parties)
4. Scenario test against a range of severe but plausible disruptions
5. Invest in capabilities to remain within impact tolerances
6. Continuously improve based on testing and real incidents
**Regulatory context**:
Financial regulators worldwide (UK PRA/FCA, US OCC, EU DORA) have introduced operational resilience requirements, recognizing that the interconnected nature of financial services creates systemic risks that require proactive resilience rather than reactive recovery.
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