A Guide to Operational Resilience for Financial Institutions

Written by Steve Fochler | Mar 18, 2025 7:00:00 PM

We’ve all heard the saying, “The show must go on.” However, this saying doesn’t just apply to actors and musicians — it’s a way of life for financial institutions (FIs) striving to maintain operational resilience in an age of constant disruptions.

An FI’s operational resilience is measured by its ability to continue operating and recover quickly following a disruptive event, such as a power outage, vendor data breach, or natural disaster. FIs need to mitigate operational risks and learn from their successes and struggles to continue to grow as organizations.

With that in mind, let’s explore operational resilience, how it differs from other components of business resilience and risk management, and how your institution can thrive by maintaining — and even mastering — operational resilience in the face of adversity.

Why operational resilience matters

Operational resilience ensures that an institution can maintain or quickly restore its critical services and functions in the face of challenges, from cyber incidents to vendor power outages. These disruptions present many risks, including compliance, third-party, and operational risks.

Operational risks occur when people, processes, or systems fail — presenting the potential for financial loss. Today’s FIs are exposed to increasing operational risks from new and growing cyber risk, technology (ex: AI and machine learning), and an increasing dependence on third-party vendors and fintechs. According to the Federal Reserve’s Supervision and Regulation Report from November 2024, information technology/operational risk findings were the most cited category of outstanding issues for community banks.

To address growing operational risks, the Office of the Comptroller of the Currency (OCC) and other regulators emphasize the importance of enterprise change management and operational resilience as part of an FI’s integrated risk management (IRM) strategy.

Operational resilience vs. business continuity vs. business resiliency

IRM touches on risk management, recovery, and resilience, but the terminology can get confusing. While these concepts all help an organization stay strong, they aren’t interchangeable — especially when it comes to operational resilience. Here’s how they differ:

Business continuity. Business continuity is a subset of operational resilience focused on planning for specific disruptions and ensuring an organization can continue critical functions during and after an event. It includes detailed planning and response strategies, including business continuity planning (BCP), disaster recovery (DR), crisis management, and incident response. Tactical in nature, business continuity addresses how an organization will keep running in the face of disruption.
Business resiliency. Business resiliency is an FI's ability to anticipate, prepare for, and adapt to changing conditions so it can withstand and rapidly recover from disruptions. While operational resilience focuses on critical operations and functions, business resiliency considers the organization's strategic goals and financial objectives and how it can continue to thrive and innovate amid constant change and challenges.
Disaster recovery. Disaster recovery is how an FI regains critical systems and resumes operations following an event. A disaster recovery plan (DCR) details specific procedures for addressing a problem, protecting data, and getting systems back online within a broader operational resilience strategy.

Operational resilience and governance

Operational resilience isn't just about responding to external disruptions — it also plays a critical role in managing internal challenges and opportunities, particularly in governance.

A strong governance framework provides the structure, policies, and decision-making processes that guide an institution’s strategy. It defines roles, responsibilities, and risk management practices that keep the organization aligned and accountable. Operational resilience strengthens this foundation by ensuring that disruptions — whether internal or external — don’t derail strategic initiatives, stakeholder confidence, or long-term success. By integrating resilience into governance, financial institutions can maintain stability, adapt to change, and continue protecting their customers and business.

The role of vendor relationships in operational resilience

One prominent reason TPRM has been on regulators’ radars is the importance of operational resilience. From payment processing and mobile payments to backup power generation and customer service, critical vendors not only have a significant impact on your FI’s operations if something goes wrong but also have direct access to customer data, opening your institution to even more risks.

The Interagency Guidance on Third-Party Relationships: Risk Management emphasizes evaluating a vendor’s operational risk management and ensuring they have adequate financial and operational resources for preparedness, adaptation, resilience, and recovery. Key review areas include robust business continuity management (BCM) programs, disaster recovery plans, and the frequency of resilience testing.

Additionally, regulators suggest that FIs analyze a vendor’s redundancy plans and consider technology-related risks that could affect operational resilience. Reviewing outcomes and performance during actual disruptions can also provide insight into a third party’s resilience.

Key aspects of operational resilience

Now that we've discussed what operational resilience is, its role in governance, and key areas of regulatory focus, let's dive into some of the critical components of a strong operational resilience strategy:

Risk identification and management. To adequately guard against risks, you must have a risk identification and management process. As you consider your institution's operational resilience approach, refer to your risk management plan to understand your FI's potential risks and how to minimize their impact.
Business continuity plan. A BCP identifies critical functions and minimum service levels that must be met to maintain operations post-disruption.
Disaster recovery plan. A disaster recovery plan is typically included in a BCP and focuses on recovering information technology (IT) systems, applications, and data post-incident.

Incident response plan. An incident response plan details the items that must be completed to minimize damage and help ensure a quick recovery, including incident detection procedures, incident analysis, documentation requirements, and recovery of systems and operations.
Cybersecurity and data protection. Cyber risk is the number one risk concern among banks and other FIs because it covers multiple risks, from ransomware attacks to data breaches. FIs should regularly test their internal controls and security protocols for cybersecurity protection, as well as their vendors’ (and even fourth parties’) cybersecurity practices.

Setting the stage for operational resilience at your FI

Operational resilience requires more than just a swift recovery from disruptions — it demands a proactive approach to protection, prevention, and adaptation. Institutions must not only withstand and recover from challenges but also anticipate risks, strengthen defenses, and evolve in response to changing threats and opportunities.

Understanding the components of operational resilience, including its relationship with business continuity and other strategies, helps institutions better prepare for challenges and continue to thrive.

Want to learn how your FIs can use business continuity software to support your operational resilience strategy?

Download the Business Continuity Management Buyer’s Guide.

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