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FORTRESS
                                    2020
                                    TRENDS/
                                    PREDICTIONS
                                    REPORT

+44(0)20 3858 0099   info@fortressas.com
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FORTRESS 2020 Trends/Predictions Report                                2

  THE DEFINITIVE 2020
  PREDICTIONS GUIDE FOR
  OPERATIONAL RESILIENCE
Financial Resilience has been a key focus area for         with the potential to undermine the safety,
the Financial Services Industry and its regulators         stability and integrity of firms or the global
since the challenges of 2008.                              financial system on a broader basis.
The Bank of England ‘s discussion paper entitled           As the nature of risk has evolved over time,
“Building the UK Financial Sector’s Operational            Operational Resilience has taken on greater
Resilience”, published in conjunction with                 significance for the regulators. The openness
the Prudential Regulation Authority (PRA) and              and complexity of the financial ecosystem and
Financial Conduct Authority (FCA) advocated                the likelihood that breakdowns will happen
that Operational Resilience underpins Financial            means that firms must do more than monitor and
Resilience. This, and its recommendations                  mitigate risks, they must also focus on building
on processes, policy and allocating responsibility,        resilience to ensure that they can continue to
raised the focus on Operational Resilience to              deliver Business Services when an incident
the same level that had previously been placed             occurs. The Bank of England also advises that
on Financial Resilience in the preceding decade.           plans are put in place on the basis that these
                                                           incidents will occur, rather than might occur.
In today’s highly interconnected and digital
world, failures can have far reaching implications

  WHAT ARE THE BIGGEST
  TRENDS AND PREDICTIONS
  FOR OPERATIONAL
  RESILIENCE IN 2020?
  At FortressAS, Operational Resilience is at
  the heart of everything we do. We were
  formed specifically to answer the cyber
  and operational risk and resilience needs
  of modern businesses.
  Our management team have had a long history
  of involvement in the industry and we have
  therefore seen many changes over the years
  in Operational Resilience. The threats have
  changed over time as have the requirements
  of the regulators.
  This year, in discussion with leaders in the
  Financial Services Industry we have identified
  5 key trends that we will see in 2020 relating
  to Operational Resilience:
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01                 DP118 WILL DRIVE
                   ACTIVITY FORWARD
The Bank of England’s discussion paper and subsequent consultation papers are
shaping the financial services industry view of Operational Resilience.

In 2019 many companies reviewed their                      become disconnected from their customer
Operational Resilience and continuity strategy             outcomes. The regulators then jumped on the
from an infrastructure perspective only, but               back of this because their focus is protecting
in 2020 this shifts towards this being reviewed            the consumer and the wider market structures.
in line with DP118. There will be a change
                                                           When you compare the banking sector with
in approach from the more traditional business
                                                           other sectors, they are far more advanced in
impact analysis to looking at the business
                                                           some areas but woefully inadequate in others.
services that Customers consume and work
                                                           Due to the regulatory scrutiny they are under
backwards from there.
                                                           many on the senior management team give their
                                                           attention to developing resilience, and rightly so,
                                                           but some of the processes they are implementing

  ”
                                                           have already been in existence for a long time.
                                                           This kind of end to end view of resilience and
                                                           keeping the customer in mind has often been
                                                           set up by organisations in response to issues
  This has been a long time                                in their supply chain.”
  coming and its history goes                              Peter Scott, Chief Admin Officer at Nomura Asset
  back to the big IT failures that                         Management, comments: “At Nomura Asset
                                                           Management we are seeing a move towards
  made the financial industry                              more alignment with DP118 and have started
  and banks sit up and take note                           to increase the scope of what we look for in our
  of their operational resiliency.                         business analysis.
                                                           We also look at who our counter parties are to
                                                           identify the key ones and reach out to them to
Fin Curror, Executive Director at Morgan                   engage them in discussions around what their
Stanley, agrees: “It is certainly true that many           business continuity plans are.”
organisations are reviewing their operational
resilience needs and business continuity                   DP118 will very much drive activities forward
requirements, and 2020 will see this happening             in business continuity and operational resilience
more in line with DP118.                                   in 2020 and beyond, and those organisations
                                                           who respond to it will be one step ahead of their
2019 has seen many organisations responding                competitors as they focus on building strong
to DP118 and deciding how they are going to                resilience capabilities.
change in line with it, and we will start to see
those changes coming to the forefront in 2020
and beyond.”
James Crask, Head of Resilience Advisory at
Marsh, also agrees: “This has been a long time
coming and its history goes back to the big IT
failures that made the financial industry and
banks sit up and take note of their operational
resiliency. Those resilience capabilities have
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02                 RESPONSES ON
                   “SHOW TO ALL”
In today’s connected world, customers will judge a business’s values
by how it communicates during a disaster or crisis.

Customers will judge a business’s values by how            and if you consider share performance to be
it responds to a disaster or crisis. Social media          a measure of an organisation's trust and the
now means “there is nowhere to hide”. In today’s           amount of trust that the organisation has,
24/7 connected world customers can easily                  it is a good metric to measure. It was clear
vent their frustrations on social media against            that businesses that handled their crises well
organisations and having a strong Operational              were rewarded with much higher levels of
Resilience approach with this today is a must.             share performance and those levels could be
                                                           sustained for the long term. When you look
Fin Curror, Executive Director at Morgan Stanley,
                                                           at the characteristics of the organisations that
comments: “We will definitely see more of how
                                                           had done well versus those that had not done
resilient businesses are by how they respond
                                                           quite as well were characterised by good post-
to a disaster or crisis. Social media will play
                                                           crisis behaviours. This reinforces the prediction
a greater part and many organisations will need
                                                           that the consumer will reward and hold
to have solid plans in place for how they will cope
                                                           in high regard those businesses that are good
with online comments in the event of a disaster.
                                                           at dealing with disasters.”
More robust plans will need to be put in place
and followed to ensure that businesses stay as             Social responsibility is a concept that every
resilient as possible against disasters and how            organisation should adhere to, but being able
those disasters are responded to by organisations          to convey a positive corporate sentiment across
online will be crucial.”                                   multiple channels that include social media
                                                           can present real challenges. However, getting
The Bank of England and FCA also made it
                                                           this right can also impact positively on sales
clear in their discussion paper and subsequent
                                                           and customer loyalty. With customer service
consultation paper that they also expect
                                                           expectations rising year after year, consumers
firms to have robust internal and external
                                                           frequently look to brands to create seamless
communications plans especially when it comes
                                                           and consistent messaging, even when in crisis,
to how they respond to a disaster or crisis.
                                                           across all media. How these channels are
James Crask, Head of Resilience Advisory                   managed in the event of a crisis or disaster can
at Marsh, comments on this accordingly:                    make or break an organisation.
“We undertook some research last year looking
at the impact of prices on share performance,
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03                 TIME
                   FOR ACTION!
After the distractions and uncertainty of 2019, along with the reviews
of high-level business services as a response to the BoE discussion paper,
2020 will be a year of action.

After the release of the Bank of England’s                 Fin Curror, Executive Director at Morgan
discussion paper in 2018, where much                       Stanley, agrees: “2020 will definitely be
debate took place as to its contents, 2020                 a year of significant change, and it is likely
will be a year of action as financial institutions         we will see this change spreading into 2021
race to implement much of the content of the               and beyond. Brexit and the recent General
paper to help make them more operationally                 Election campaign has provided much
resilient. With many distractions and uncertainty,         uncertainty which does not show any sign
particularly around Brexit over the last three             of slowing down any time soon, so 2020
years, 2020 will see some significant changes.             and beyond will be years of significant action.”
                                                           To add weight to this prediction,

  ”
                                                           the FCA launched a consultation paper (CP)
                                                           in December 2019 which provided clarification
                                                           on its proposals. In this consultation paper the
  ...the Bank stated its intention                         Bank stated its intention to bring about change
                                                           in how the industry responds to and thinks about
  to bring about change in how
                                                           operational resilience, which is informed and
  the industry responds to and                             driven by the public interest.
  thinks about operational resilience
  which is informed and driven
  by the public interest.
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04                  CYBER RISK
                    INCREASE RELENTLESS
Banks and financial institutions will need to be more cyber resilient to protect
their businesses from risk.

Although organisations will need to reduce                  link in cyber defence. The Bank and FCA are
their cyber risk, the real necessity here will be           pointing out that cybersecurity risks need not
to develop operational resilience. That is, if and          be external and we must also look closely at the
when they do get hit, organisations should have             Insider Threat when it comes to managing risk.
plans in place to keep their business moving
                                                            It is important to minimise the likelihood and
in this event.
                                                            impact of a cyber-attack, but many feel that you
The cyber security aspect of overall operational            cannot safeguard against everything. Something
resilience is a key area that many organisations            will eventually slip through the net and
intend to focus heavily on in 2020. The response            organisations need to be sure that they can deal
to a cyber-attack is very closely related to                with the impact of an attack.
an organisation’s existing continuity and
                                                            Being cyber resilient is something that all
resilience plan, and these plans do not tend
                                                            organisations should take seriously, especially
to be separated.
                                                            financial institutions, and should be part of their
From the beginning of Q1 2020 many                          overall business continuity and operational
organisations intend to introduce additional                resilience plans.
safeguards to enhance the internal training of
their staff, as people are still the biggest weak

  05                   TESTING,
                       TESTING!
   2020 will be a year to test new processes in the light of these reviews.

   The culmination of this action and activity will        will always be ways in which the recovery
   be testing. In the light of this, the primary           process can be improved. The aim of testing
   focus will be on proving that the provisions            is to uncover resilience gaps and to enable
   and processes that organisations have                   investment decisions about resiliency provision
   in place will prevent operational incidents from        to ensure that critical business services are
   impacting consumers, financial markets and UK           provided even when severe disruptive events
   financial system.                                       happen.”
   The regulators are clear that testing is integral
                                                           Testing will become the cornerstone
   to the operational resilience process and
                                                           of business continuity and operational
   that firms must demonstrate and document
                                                           resilience in 2020, and those who have rigorous
   their testing procedures to prove their ability
                                                           testing programmes in place will reap the
   to meet impact tolerances.
                                                           rewards as the year progresses.
   Andrew Lawton, CEO of FortressAS explains:
   “We encourage our customers to test as there
FORTRESS 2020 Trends/Predictions Report                        7

  FINAL THOUGHTS/
  CONCLUSION
Fortress Availability Services Limited (FortressAS),
CIR Specialist Provider of the Year 2019,                      Customer satisfaction is the
was formed specifically to answer the Cyber
                                                               driving force behind the FortressAS
and Operational Risk and Resilience needs
of modern businesses.                                          team’s work, and they the winning
With a focus on supporting the Financial                       entry to CIR Specialist Provider
Services Industry, FortressAS has built the most               of the Year 2019 was a result
advanced work area recovery facility in the
                                                               of Customer commendations.
UK. The innovative and flexible resiliency
and recovery services, supporting many banks,
asset managers and insurers have this centre
as their foundation.

       ABOUT FORTRESS
       AVAILABILITY SERVICES
       Fortress Availability Services Limited (FortressAS),
       CIR Specialist Provider of the Year 2019,
       was formed specifically to answer the Cyber
       and Operational Risk and Resilience needs
       of modern businesses.
       With a focus on supporting the Financial
       Services Industry, FortressAS has built the
       most advanced work area recovery facility in
       the UK. The innovative and flexible resiliency
       and recovery services, supporting many banks,
       asset managers and insurers have this centre
       as their foundation.
       Customer satisfaction is the driving force behind
       the FortressAS team’s work, and they the winning
       entry to CIR Specialist Provider of the Year 2019
       was a result of Customer commendations.
Contact Us   Fortress Availability Services Limited • City Reach, 5 Greenwich View • London E14 9NN
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