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In Focus: Operational Resilience – Impact Tolerances 

Many organisations have demonstrated crucial resilience throughout the pandemic and while lessons have been learnt it is important firms do not lose sight of maintaining resilience for future events. This week Lindsey Domingo at Xcina Consulting Limited, looks at the concept of Impact tolerances, mandated by UK Financial Regulators in their respective policy statements in March 2021. We have been working with several firms helping to guide them through the process of setting impact tolerances which should follow once important business services have been identified.

Here are some of the questions we’re helping senior management teams to address:

Any disruption to important business services can impact the regulators’  objectives.  How is your firm limiting the impact to your business?

Several metrics will help firms place the appropriate level of tolerance. We review possible scenarios organisations should consider.

There are some distinctions between the FCA and PRA requirements in terms of statutory objectives for dual and solo regulated firms.

We have identified a series of steps firms should follow to establish the right framework for setting impact tolerances.

There are common areas of challenges many organisations share, but there are clear methodologies to help develop impact tolerances and allow firms to take preventative measures.

The implementation period ends on 31 March 2022.  There is a lot to be done, and we have provided some useful starting points covered in earlier chapters. Other key dates are outlined here.