More than 60 of the UK's most significant firms and financial infrastructure providers volunteered to take part in the Resilience Benchmarking Project and many of them helped in its planning and design. The research was, therefore, very much a joint
effort between the participants and the authorities.
The survey aimed to answer the following questions:
• How resilient is the UK financial sector?
• How quickly could the sector recover from major operational disruption?
• Do firms plan and prepare effectively?
• Are there any concentrations or dependencies that could be potential areas of
vulnerability?
• What action is needed to improve the resilience or recovery capability of the sector?
The results indicate that those firms and financial infrastructure providers who represent the core of the financial system have highly resilient IT systems and could recover critical functions rapidly following major operational disruption. Their preparedness stands the sector in good stead in terms of its overall level of resilience and ability to recover.
There are, however, several areas where there is scope for firms to improve their planning and preparation for major operational disruption. In particular, the sector would benefit from progressing from a strong, but heavily IT-focused, disaster
recovery approach towards the adoption of more rounded business continuity principles. For example, firms could strengthen their arrangements by collaborating with key third parties such as infrastructure providers and service suppliers to bring about more co-ordinated planning, testing and risk mitigation.
The survey also highlights the significant geographical concentration of some critical business functions and back-up sites in and around London. Moreover there is a high degree of reliance on financial infrastructure providers, on key providers of
telecommunications facilities and on providers of disaster recovery facilities. These are issues the authorities will be taking forward with the participants themselves as well as with the relevant third parties.
Hector Sants, managing director of the FSA's wholesale firms division, said: "It is encouraging that the project has established that the core parts of the financial system appear to have highly resilient IT systems that allow them to recover critical functions with impressive speed. This stands the sector as a whole in good stead and confirms to us that we do not at this stage need to write detailed rules telling firms what business continuity arrangements they should adopt.
"Several participants have described this exercise as very helpful in terms of improving business continuity teams' understanding of their firms' critical business functions. This is a welcome development but highlights that firms need to do more to ensure that business continuity staff are sufficiently aware of the business functions they are supporting.
"Almost all participant firms have already indicated that they are planning to make changes to their business continuity arrangements as a result of what they have learned from the project. We will aim to build on our existing approach of identifying what constitutes good practice and sharing this with
firms."
Each participating firm has received a detailed individual benchmarking report. The project was led by the FSA's Financial Stability Sector Team, headed by Oliver Page, which covers both business continuity and financial crises. Other major financial stability initiatives this year have included a Discussion Paper on 'fact books' (which invites comments on the key data that firms need to provide to the Tripartite Authorities in the event of a financial crisis) and the market-wide business continuity
exercise undertaken on 28 November.
Comments on the Discussion Paper and feedback on the proposals it contains for further work are invited by the end of March 2006 and the authorities aim to publish a feedback statement by the end of May 2006.
