Compliance versus Resilience - This is our take on the matter
Introduction
In the landscape of financial services and critical infrastructure, the concepts of operational resilience and regulatory compliance are often intertwined. An argument can be made that establishing a robust operational resilience program management is the cornerstone for achieving comprehensive compliance capabilities. This approach contrasts with efforts that primarily focus on compliance to meet operational resilience standards. Here's why building resilience into the core of business operations and systems inherently leads to better compliance outcomes.
Defining the Foundations
- Operational Resilience as a Strategic Imperative: Operational resilience refers to the ability of an organization to anticipate, prepare for, respond, and adapt to incremental change and sudden disruptions in order to survive and prosper. It focuses on the continuity of critical business services, beyond just recovering from crises.
- Compliance as a Regulatory Requirement: Compliance, on the other hand, involves conforming to laws, regulations, standards, and ethical practices related to business operations. It is often seen as a reactive approach where the primary motivation is to meet external requirements imposed by regulators or standards bodies.
Core Argument: Operational Resilience Drives Compliance
- Proactive Versus Reactive Stance: A solid operational resilience program is inherently proactive. It involves understanding potential threats, vulnerabilities, and impacts to critical business services and putting in place strategies to mitigate risks. This forward-thinking approach not only prepares organizations to handle disruptions effectively but also ensures that many of the regulatory requirements, which often focus on risk management and effective controls, are inherently met. In contrast, a compliance-first approach can be inherently reactive, focusing on meeting specific requirements that may not comprehensively address all operational risks.
- Integration Across the Organization: Effective operational resilience requires a holistic approach that integrates risk management, business continuity, IT operations, and third-party management across the entire organization. This integrated approach results in a robust governance structure that aligns with many compliance frameworks which emphasize governance, risk assessment, and comprehensive management protocols. Compliance efforts that follow as a secondary benefit from such integrations tend to be more cohesive and naturally aligned with business objectives.
- Innovation and Continuous Improvement: Operational resilience programs encourage continuous monitoring and improvement based on both internal and external changes. This dynamic nature of resilience planning fosters innovation in risk management and crisis response strategies. Compliance programs that evolve from such an environment are more adaptable to regulatory changes and more effective in integrating new compliance requirements.
- Stakeholder Confidence and Reputation: Organizations with strong operational resilience capabilities demonstrate reliability and stability, which in turn builds stakeholder confidence. Compliance is not just about meeting legal requirements but also about maintaining trust with customers, investors, and regulators. Operational resilience inherently builds and maintains this trust, thereby enhancing an organization's reputation and indirectly fulfilling one of the key objectives of compliance.
- Cost Efficiency: Building compliance into resilience efforts can be more cost-effective in the long run. It eliminates the need for separate initiatives and redundant processes that may arise when compliance and resilience efforts are siloed. This unified approach not only reduces costs but also enhances the effectiveness of the investment in compliance and resilience capabilities.
Conclusion
While compliance is necessary and non-negotiable, approaching it through a well-structured operational resilience framework provides a strategic advantage. Not only does it meet regulatory requirements, but it also builds a robust system that ensures the organization's sustainability and growth in the face of disruptions. Therefore, a solid operational resilience program management should be viewed as the primary strategy for achieving comprehensive compliance capability, rather than viewing compliance as a pathway to achieving operational resilience.
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