What is Business Continuity for Financial Institutions?

Risk management never stops. Disruptions — intentional and unintentional, internal or external — can occur anytime. That's why financial institutions (FIs) should prepare for the inevitable and take proactive steps to minimize both the impact of disruptions and the risks they pose.  

A single, standalone incident can affect an entire institution, impacting hundreds or thousands of customers. Just ask Capital One, whose customers could not access their direct-deposited paychecks for days after a vendor experienced a power outage. The banking giant wasn't the only one; more than two dozen other banks were affected, leaving thousands of unhappy customers wondering when they could access their funds.   

The good news is that while these events have become all too common in the financial services space, they can be avoided or the effects mitigated through business continuity management — your FI's strategy for overcoming challenges while maintaining operational efficiency.  

But how can your FI better manage business continuity and mitigate risks? How does business continuity differ from disaster recovery? What is its role in your institution's broader risk management strategy? Let's discuss.  

Related: Business Continuity Planning: Where to Start 

What is business continuity? 

Business continuity is an organization’s ability to maintain or resume essential operations when there is a significant disruption or incident, either internal or external. Disruptions can include natural disasters, such as hurricanes and fires, cyberattacks, fraud, theft, system outages, and security threats like a gunman in or near the financial institution (FI).  

Business continuity isn’t just about preparation. Other key components of business continuity include: 

1. Resilience: the ability to quickly adapt, respond to, and withstand disruptions  
2. Recovery: restoring operations after a disruption as quickly as possible 
3. Contingency plans: strategies for responding to disruptions 
4. Cyber resilience: the ability to prevent and recover from cyber-related incidents 
5. Vendor management: the process of assessing, monitoring, and mitigating risks third-party risk to ensure providers don’t disrupt an organization’s operations 

Strong business continuity comes from integrating resilience, recovery, and contingency planning to minimize disruption impact while ensuring a rapid return to normal operations. Cyber resilience safeguards digital infrastructure, and vendor management ensures third-party dependencies don’t become weak links in continuity efforts. 

The evolution of business continuity 

Business continuity at financial institutions is evolving in response to increasing cyber threats, operational complexities (innovative technologies such as AI and increased use of third-party service providers), and regulatory expectations. 

Cyber resilience: As threats of ransomware, data breaches, and emerging AI-driven cyber threats grow, business continuity has grown increasingly focused on strong cybersecurity protections, not just technology solutions but manual workarounds if systems and data are compromised. 

Third-party risk: Financial institutions increasingly rely on cloud providers, fintech partnerships, vendors, and innovative solutions featuring artificial intelligence (AI) and machine learning, making third-party resilience a critical part of business continuity planning. 

Remote work & decentralized operations: Institutions have reexamined continuity strategies as they’ve shifted to hybrid work models where ensuring remote access security, cloud resilience, and redundancy across locations is a priority. 

Regulatory scrutiny: Regulators have put increased focus on business continuity and resilience. For example, the Federal Financial Institutions Examination Council (FFIEC) updated its guide on business resiliency, shifting the focus from business continuity planning (BCP) to business continuity management (BCM). Unlike BCP, which focuses on recovery plans, BCM emphasizes proactive risk management and resilience, aligning with an institution's strategic goals and risk appetite. 

Meanwhile the Interagency Guidance on Third-Party Relationships: Risk Management emphasizes oversight of vendor operational resilience and business continuity. 

Related: Business Resiliency: Your Guide to Business Continuity Management 

Business continuity vs. disaster recovery 

Sometimes "business continuity" and "disaster recovery" are used interchangeably, but there are some critical differences:  

1. Scope: Business continuity covers the entire business ecosystem, including the people, processes, technology, and infrastructure. Disaster recovery focuses on recovering information technology (IT) systems, applications, and data post-incident.  
2. Time frame: Business continuity focuses on long-term recovery, while disaster recovery plans focus on short-term restoration of critical IT infrastructure and systems.  
3. Strategy: While business continuity involves immediate and long-term strategies, disaster recovery is typically activated post-event, focusing on short-term recovery processes. 
4. Essential components: A BCM plan typically includes team members' roles and responsibilities, core function recovery procedures, backup technology, and communication guidelines with employees, consumers, and regulators. A disaster recovery plan consists of critical operations and IT assets, a business impact analysis (BIA), and key metrics (recovery point objectives, recovery time objectives, and maximum allowable downtime).  

As you evaluate your BCM strategy, ensure that a disaster recovery plan is included.  

Related: Business Continuity Planning and Disaster Recovery: The Differences 

Business continuity and vendor relationships

In his book The Upside of Risk, Ncontracts founder and CEO Michael Berman emphasizes the role of vendor management in business continuity. “If vendor management isn’t represented in business continuity planning, there will be substantial holes in the plan, limiting its ability to mitigate the risk of a crisis.” 

The good news is that financial institutions and companies across other industries are taking third-party risk management (TPRM) seriously. According to Ncontracts and Venminder’s State of Third-Party Risk Management 2025 survey report, 83% of respondents have established TPRM programs. However, organizations are also managing more vendors than ever, opening even more opportunities for operational, cyber, fourth-party, and other forms of risk. 

As you revisit your BCM, ensure your vendor risk assessments are updated and all business continuity red flags, such as a lack of documentation and outdated testing results, are addressed. A failure to address vendor risks is disastrous for your business continuity management strategy and your entire risk management framework.  

Related: 5 Business Continuity Red Flags in Vendor Relationships and How to Address Them 

How to manage business continuity effectively

BCM is a key area of risk management, alongside vendor management, cybersecurity, compliance, and enterprise risk management. These areas overlap and work together to create a strong, dynamic risk management program.  

The BCM lifecycle, part of an FI’s larger risk management strategy, consists of 10 steps outlined by the FFIEC. While every FI must adapt the lifecycle to suit their size and resources, these steps serve as best practices for developing and maintaining effective BCM:  

1. Oversight and implementation: Supervise and execute resilience, continuity, and response strategies. Ensure your plans and documents are formatted consistently and available in a centralized location.  
2. Alignment with strategic goals: It all goes back to strategy. Risk-related decisions should align with your institution’s risk appetite, goals, and objectives.

Related: How to Build a Strategic Plan that Evolves With Your FI 

3. Business impact analysis. Create a BIA, which evaluates and analyzes the potential effects of an interruption in business operations, to pinpoint critical functions, examine interdependencies, and evaluate impacts. 
4. Risk assessment. Perform a risk assessment to identify potential risks and assess the likelihood and consequences of disruptions. Depending on the importance of the risk area, a dynamic risk approach is often necessary.  
5. Strategy development. Formulate effective strategies to achieve resilience and recovery aims. 
6. Business continuity plan. Develop a comprehensive business continuity plan that includes incident response, disaster recovery, and crisis/emergency management. 
7. Training program. Implement a training program on business continuity for staff and relevant stakeholders.  
8. Exercises and testing. Conduct drills and tests to ensure procedures meet established objectives and that everyone on the team knows their roles and responsibilities within BCM and your institution’s broader risk management framework. Practice makes perfect! 
9. Program review and updates. The financial services industry is constantly evolving to meet new regulatory requirements and trends. Regularly review and update the business continuity program to stay aligned with the current landscape.  
10. Monitoring and reporting. What isn’t measured can’t be improved—and that extends to your business continuity risk. Monitor and report on business resilience initiatives. 

Related: 8 Features to Look for in a Business Continuity Solution  

How to measure business continuity risk 

Understanding the risks you face will help determine the actions your FI needs to take for protection. Key Business Continuity Indicators help quantify and monitor these risks:  

• Key risk indicators (KRIs) measure changes in the risk environment and signal potential threats. Example business continuity indicators include the number of attempted cyberattacks per month, time to detect/respond to a cybersecurity incident, percentage of systems with unpatched vulnerabilities, frequency of manual workarounds used due to system failures, number of critical functions lacking an automated backup solution. 
• Key performance indicators (KPIs) are measurable benchmarks that show how well your business continuity risk mitigation strategies are working. Examples of business continuity KPIs include percentage of cyber threats successfully blocked, Mean Time to Recovery (MTTR) after an incident, system uptime percentage and percentage of business functions tested, etc.

By monitoring these and other indicators, FIs can understand where risk is growing, uncover internal issues, and adjust controls and plans to address business continuity risks.  

Related: Key Resilience and Business Continuity Indicators for Financial Institutions 

Business continuity is a critical component of your organization’s risk management strategy. Too often, institutions fail to implement effective BCM properly and, in the process (or lack thereof), set themselves up for problems down the road. 

While BCM can be a significant undertaking, business continuity management software can streamline the process, so your institution is always one step ahead of crises. From automated crisis communications across your organization to efficient continuity planning — including data gathering and risk assessments — the right BCM solution can save your team time and money while protecting your institution.  

Want to learn more about building business resilience? 

Watch our webinar on building future-proof financial institutions.