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Bank Resilience — The New Stress Testing Frontier — Thoughts on a Framework
Business As Usual (BAU) is dead….long live Resilience.
When it comes to Bank Resiliency, a new mind game is brewing in the regulatory world. We got the financial stress testing covered (so we assume), how about operational resiliency of the Banks and Systemically important institutions (such as custodians)?
- What would happen if End of the day (EOD) settlements fail at a large scale? What does the T+2 (the day after T+1) look like?
- What would happen if a bank cannot recover from a cloud failure?
- What would happen if there is a large scale Cyberattack?
It is not easy to identify all the ways, Bank and Intermediaries could potentially get the Banking or Shadow Banking system into trouble?
How can we articulate these risks? (Think beyond Operational Risks that are largely internal focused and less Business Technology focused). Can we measure them?
It is not really about technology and infrastructure, but how we can manage and operate business systems and think about all the potential ways they could fail, both due to internal or external causes.
How could we make these systems, operationally resilient? What the biggest risks and how can we do…
