As financial institutions face increasing regulatory pressures and cybersecurity threats, integrating Governance, Risk, and Compliance (GRC) frameworks with operational resilience is crucial. GRC lays the groundwork for navigating regulatory landscapes and managing risk exposure, while operational resilience ensures business continuity during disruptions—whether caused by cyber incidents, third-party failures, or system outages.
For CFOs, operational resilience protects revenue streams, investor confidence, and brand reputation. By embedding resilience into GRC strategies, organizations can manage risk, safeguard core operations, and adapt to evolving regulations.
Operational Resilience: Addressing Critical Challenges
Operational resilience has become a core component of risk management, particularly for financial services institutions and heavily regulated industries. The growing threat of cyberattacks, third-party dependencies, and increased regulatory pressures make it essential to not only recover from disruption but also to minimize and manage them effectively.
CFOs must ensure their institutions can financially withstand disruptions. Swift recovery is essential for protecting revenue and customer trust. Achieving resilience requires focusing on three key areas:
- Risk Identification and Impact Assessment: CFOs must oversee third-party risks and assess their financial impact. This helps improve financial forecasting and risk mitigation.
- Contingency Planning: Effective contingency plans are crucial for minimizing financial disruptions and must be regularly tested and updated.
- Routine Testing and Documentation: Transparent, up-to-date documentation of processes and IT systems is essential for assessing preparedness. CFOs must ensure these documents are accurate, and that contingency plans are tested regularly.
Operational resilience must be integrated into financial planning, risk management, and compliance efforts.
Navigating U.S. Regulations: NIST Cybersecurity Framework (CSF) and SEC Cybersecurity Rule
In the U.S., frameworks like the NIST Cybersecurity Framework (CSF) and SEC Cybersecurity Rule focus on operational resilience, particularly in relation to cybersecurity and third-party risks.
The NIST Cybersecurity Framework (CSF) provides a flexible structure for assessing cybersecurity resilience. Though not legally binding, it serves as a benchmark for best practices. CFOs should use this framework to reduce financial exposure to supply chain disruptions and align with federal standards.
The SEC Cybersecurity Rule requires public companies to disclose material cybersecurity incidents and governance strategies. For CFOs, this has direct implications for financial reporting and investor relations. Non-compliance can lead to costly enforcement and reputational damage.
Both frameworks highlight the need for operational resilience to minimize financial fallout from cyber incidents and third-party risks.
The EU Perspective: Digital Operational Resilience Act (DORA)
In the EU, the Digital Operational Resilience Act (DORA), coming into effect in January 2025, will impose stringent requirements on all financial institutions operating in the EU to ensure they can withstand, respond to, and recover from cyber risks and ICT incidents.
DORA focuses on comprehensive documentation of processes, especially those involving third-party providers. Financial institutions must ensure that they can effectively document, assess and mitigate operational risks to avoid disruptions and penalties.
Why CFOs Must Act Now
The regulatory environments in the U.S. and EU underscore the urgency for CFOs to prioritize operational resilience. The NIST and SEC frameworks set expectations for cybersecurity and third-party risk in the U.S., while DORA introduces similar demands in the EU. Operational resilience is about more than compliance—it protects revenue, financial health, and investor confidence.
Delaying action until regulations are in force is risky. CFOs must integrate resilience into your broader risk management strategies now. Embedding resilience into GRC frameworks helps meet compliance standards and safeguard financial health.
Tools like ARIS for process intelligence and integrated risk management offer seamless integration of process data and IT systems, enabling efficient risk management. The alternative—relying on outdated tools—can increase risks, inefficiencies, and threatens compliance and operations.
Conclusion: Long-Term Financial and Operational Resilience
Operational resilience is not just a regulatory requirement—it’s a strategic imperative for protecting the institution’s financial health and ensuring continuity. By acting now, you can prepare for future disruptions, safeguard revenue streams, and enhance long-term financial performance.
