The financial sector has long relied on Business Continuity Planning (BCP) as a safeguard against disruptions. However, with the increasing complexity of financial systems and the rising frequency of cyber threats, operational resilience has become a critical focus for regulators. The introduction of the Digital Operational Resilience Act (DOORA) underscores the need for financial institutions to move beyond traditional BCP and adopt a more comprehensive approach to resilience.

The Evolution of Operational Resilience

Business Continuity Planning has traditionally been the cornerstone of financial institutions’ risk management strategies. These plans focus on maintaining critical operations during disruptions such as natural disasters, IT failures, and security breaches. However, recent regulatory developments have shifted the focus toward a more proactive and integrated approach.

Global regulatory bodies, including the European Union’s DOORA, the UK’s Financial Conduct Authority (FCA), and the UAE’s Central Bank, now emphasise continuous risk assessment, advanced incident response, and third-party risk management. According to a study by McKinsey, financial institutions that fail to modernise their operational resilience frameworks face up to 60 percent higher costs in compliance breaches and reputational damage.

The financial impact of operational disruptions is significant. A report from IBM’s Cost of a Data Breach Study indicates that financial services firms experience some of the highest costs associated with cyber incidents, averaging USD 5.97 million per breach. These figures highlight the need for a shift from traditional continuity planning to a dynamic, technology-driven resilience strategy.

Understanding DOORA: Key Regulatory Expectations

The Digital Operational Resilience Act was introduced to enhance the stability of financial institutions by ensuring they can withstand, respond to, and recover from digital disruptions. DOORA applies to banks, investment firms, insurance providers, and third-party technology providers.

The framework consists of several key components:

• ICT risk management requirements to enforce robust cybersecurity measures.

• Incident reporting mandates to ensure rapid response to cyber threats and operational failures.

• Digital resilience testing to evaluate firms’ ability to withstand disruptions through regular simulations.

• Third-party risk management to regulate financial institutions’ reliance on cloud service providers and technology vendors.

DOORA aligns with global efforts to strengthen financial stability and mitigate systemic risks. A comparison with the UK’s operational resilience framework and the UAE’s guidelines reveals a shared objective: to integrate technology-driven solutions that enable financial institutions to operate securely in an increasingly digital landscape.

Why Financial Institutions Must Go Beyond BCP

Traditional BCP frameworks focus on recovery strategies, but the modern financial landscape requires a more proactive approach. Operational resilience encompasses a broader spectrum of risk management, including cyber resilience, fraud prevention, and crisis response.

An effective resilience framework must incorporate:

• Proactive risk management through continuous monitoring and predictive analytics.

• Agile business operations capable of adapting to evolving threats.

• Strengthened governance models ensuring accountability at all organisational levels.

Failure to implement such measures can lead to severe consequences. In 2023, a major European financial institution suffered a prolonged outage due to a cyberattack, disrupting online banking services for millions of customers. The incident not only resulted in regulatory fines but also caused significant reputational damage.

The Role of Technology in Strengthening Financial Resilience

Technology is at the heart of modern operational resilience. Financial institutions are leveraging regulatory technology (RegTech) to enhance compliance processes, automate reporting, and improve risk assessment. Key innovations include:

• Artificial intelligence-driven risk management tools that identify vulnerabilities before they escalate into crises.

• Advanced cybersecurity solutions that utilise machine learning to detect and neutralise threats in real time.

• Automated incident response systems that minimise downtime and ensure business continuity.

Digital resilience testing has also become an essential component of regulatory frameworks. Financial institutions are increasingly conducting real-time stress tests and cyberattack simulations to assess their preparedness. The UAE’s Financial Services Regulatory Authority (FSRA) recently mandated annual resilience testing for regulated firms to ensure compliance with international standards.

Industry Perspectives on Operational Resilience

Financial leaders recognise that resilience is no longer a regulatory requirement alone but a strategic imperative.

Richard Fox, Head of Financial Supervision at the Dubai Financial Services Authority (DFSA), recently stated, “Regulators and financial institutions must work together to develop resilience frameworks that go beyond compliance. True operational resilience is about ensuring financial stability in an era of digital transformation.”

A 2024 survey by PwC revealed that 78 percent of financial institutions in the GCC consider operational resilience a top priority, with 65 percent planning to increase their investment in digital risk management solutions over the next two years.

Implementing a Resilient Operational Framework

To build a robust operational resilience framework, financial institutions should focus on:

• Conducting comprehensive resilience assessments to identify vulnerabilities.

• Strengthening third-party risk management to ensure service providers comply with resilience standards.

• Enhancing cybersecurity defences through AI-driven monitoring and real-time threat detection.

• Establishing regulatory partnerships to stay ahead of evolving compliance requirements.

Collaboration between financial institutions, regulatory bodies, and risk advisory firms is essential for achieving operational resilience. As cyber threats and digital disruptions continue to evolve, financial firms must adopt a forward-thinking approach to resilience planning.

Conclusion

Financial resilience extends beyond business continuity planning. The implementation of DOORA and other regulatory frameworks underscores the importance of a proactive and technology-driven approach to risk management. By embracing digital resilience strategies, financial institutions can ensure long-term stability, protect their customers, and maintain regulatory compliance.

For firms looking to enhance their operational resilience, expert guidance is essential. At j. awan & partners, we provide tailored risk advisory solutions to help financial institutions navigate regulatory complexities and strengthen their resilience frameworks.

Contact us today to discuss how we can support your organisation’s compliance and resilience strategy.

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