Over the last decade, business continuity planning among enterprise companies has changed in response to various trends and challenges. “Organizations worldwide cite improving business continuity and disaster recovery as a top IT priority year after year,” says Forrester. This critical discipline has evolved from a reactive, checklist-based process to a proactive, strategic pillar of organizational resilience as a result.
Specifically, modern BCP is no longer about merely surviving a crisis; it’s about equipping financial institutions with the agility and adaptability to thrive amidst disruptions, ensuring uninterrupted service delivery to clients and stakeholders. It integrates risk management, IT resilience, and crisis management into a cohesive strategy that anticipates, prepares for, and mitigates potential threats.
This article defines modern business continuity planning, highlights the most pressing industry challenges that necessitate new BCP approaches, and illustrates both opportunities and key steps FI leaders can take to ensure lasting continuity and resilience in the future.
What is Business Continuity Planning?
Business continuity in financial services involves ensuring a financial institution can continue to operate normally and reliably in the event of a disruption or disaster. “Business continuity requires strategies to ensure that a company remains operational in spite of various risks materializing,” said The Economic Times CIO while reporting on the Silicon Valley Bank collapse.
Unfortunately, too many business leaders in the financial sector don’t dedicate enough resources to BCP—even though the consequences can be devastating. The collapse of the Silicon Valley Bank marked the third-largest bank failure in United States history and the largest since the financial crisis of 2008, Reuters reports. In March 2023, the bank went from being solvent to broke as depositors rushed to withdraw their funds over a period of just two days.
The event was a stark example of a failure in business continuity and risk management. The bank did not have adequate strategies in place to ensure operational resilience. Its collapse has raised questions about the stability of other tech-lending banks and the broader implications for the financial industry.
Fortunately, there are new, actionable steps financial institutions can take to ensure resiliency and business continuity and avoid crises like the SVB’s collapse in the future. These include reviewing third-party financial risks and diversifying banking relationships; but also, implementing robust Business Continuity Plans (BCPs) that consider a wide range of potential risks.
Business Continuity Challenges in the Financial Sector
Before leaders at financial institutions can consider the opportunities and definitive steps that enable successful business continuity planning in 2024, they must understand the new risk factors impacting business continuity. Here we consider several newer risk contributors and their implications for BCP.
- Remote work: With the rise of remote work, companies have had to adapt their business continuity plans to ensure that employees can work securely and effectively from home. This has introduced new challenges in terms of data privacy, security, and IT resilience.
- Supply chain disruptions: The global pandemic exposed the fragility of supply chains around the world. Financial institutions must now consider supply chain risks when creating BCPs to ensure that they can continue operating even if their suppliers are disrupted.
- Climate change: The increasing frequency and severity of natural disasters caused by climate change have made it more important for companies to have robust business continuity plans in place. This includes plans for continuing operations in the face of extreme weather events, power outages, and other climate-related disruptions.
- Cybersecurity threats: Cyber attacks continue to evolve and become more sophisticated, posing a significant risk to financial institutions. BCPs must now consider how to mitigate the impact of cyber attacks and ensure business continuity in the event of a data breach or other cybersecurity incident.
Although these are constant concerns year after year, the influence they have on business continuity planning is ever-changing. In light of these new challenges, financial institutions must take a more proactive and strategic approach to BCP.
BCP Opportunities for Financial Leaders
Fortunately, there are opportunities for financial institutions to ensure continuity, even as they new business necessities and risk factors continue. Here we consider some of these opportunities; we will also review the steps continuity planners can take to ensure they seize upon these opportunities successfully.
- Modernization of methodologies and tools: Financial institutions can move away from traditional paper-based plans and manual processes towards digitized tools that enable faster response times and greater efficiency in managing disruptions. Modernizing methodologies and tools can also help institutions stay ahead of evolving risks.
- Scenario-based testing: This technique builds on the Agile technology framework, enabling organizations to run simulations of various disruptive events and identify gaps in their business continuity plans. By conducting regular scenario-based testing, financial institutions can proactively address vulnerabilities before they become significant issues.
- Outsourcing continuity management: Many companies are looking for outside services to manage their business continuity plans, particularly for small to medium-sized businesses (SMBs) where continuity management can be prohibitively expensive. Outsourcing can be a viable option for financial institutions that need to focus on their core business activities while still ensuring continuity in the face of disruptions.
- Leveraging AI and automation: With the help of artificial intelligence (AI) tools, financial institutions can automate manual business continuity processes. This not only improves efficiency but also enables faster response times during a crisis. AI can also provide valuable insights into potential risks, helping institutions develop more effective BCPs.
Key Steps for FI Leaders to Ensure Lasting Continuity
Implementing a robust business continuity plan and technology investment approach requires careful planning and execution. Here are some steps that enterprise executive and IT decision makers can take to ensure their organizations remain resilient and operational in the long term.
- Conduct a business impact analysis: Identify the potential impact of disruptions on your business, including financial losses, reputational damage, and legal liabilities. This analysis will help you prioritize your recovery efforts and allocate resources effectively.
- Design and develop policies and standards: Develop clear policies and standards for prevention and recovery to deal with potential threats to your network. Make sure you and your team know what to do when “IT” hits the fan.
- Create contingency plans: Identify and establish your “back in action” strategies. This could include backup and recovery, disaster recovery as a service (DRaaS), redundancy, and other measures to ensure business continuity.
- Invest in multi-layer security: Modern cybersecurity threats require a multi-layer approach. In addition to traditional measures like firewalls and antivirus, consider investing in advanced threat detection and response solutions that leverage AI and machine learning.
- Beef up your IT infrastructure for rapid transitions to remote work: With the rise of remote work, it’s important to ensure that your IT infrastructure can support employees working securely and effectively from home. Consider investing in cloud-based solutions and other remote collaboration tools to enable seamless transitions during disruptions.
- Regularly review and update your BCP: As risks evolve, your business continuity plan must also evolve. Regular reviews and updates are essential to ensure that your plan remains effective and relevant in the face of new challenges.
Changing the Conversation On Continuity
The first pillar of Dun & Bradstreet’s Seven Pillars of Resilience is “Optimism: Crisis management is based on the belief that challenges are temporary and can be overcome.”
There is reason for optimism. Emerging business continuity best practices are is driving organizations toward resilience like never before. This shift not only ensures the sustainability and success of these enterprises, but also creates a brighter, more secure future for stakeholders at every level, ultimately contributing to global economic stability and growth.
Partner with Option One Technologies for Business Continuity Planning
Option One Technologies leads the way in terms of backup, business continuity, security, and disaster recovery capabilities for the financial services industry. Connect with one of our BCP experts today to learn how we can help create a more resilient future for your financial organization.