Liz Oakes of the BoE has spoken of the importance of operational and cyber resilience in a changing world. She stressed that firms must develop strong risk management frameworks as their first line of defence, and respond to threats, such as the possibility of AI heightening some risks or accelerate trends, which is why constant testing is critical. But the BoE also needs to look at system wide risks, and its stress test exercises are key to this.
She said firms must do everything in their power to address the risks, by which she meant:
- Establishing robust risk management frameworks to monitor and mitigate risks.
- Participating in stress tests, and ensuring lessons are learnt, retained and acted on.
- Ensuring first line crisis management is empowered and effective.
- Embedding impact tolerances into recovery planning.
- Promoting the ability to absorb losses when risks do crystallise and understanding the channels by which losses can transmit through the system.
- Ensuring that boards understand substitution under severe disruption.
But she also said that international engagement and cooperation are vital.