Strengthening operational resilience within the back office

Operational resilience refers to an organisation’s ability to withstand, adapt to, and recover from disruptions and unexpected events whilst continuing to deliver its critical functions and services. Whilst the back office is often described as the ‘backbone’ of an organisation and is responsible for the administrative and operational functions that support the front office. It makes sense then, that to improve an organisation’s operational resilience, you need to strengthen the ‘backbone’.

The back office is a vital component within operations, but one that is often overlooked and generally the last in line to receive investment. It typically has a series of functions such as settlement, clearance, reconciliation, risk management, compliance, accounting, and reporting. These activities are essential for maintaining the integrity of financial transactions, managing risks, and ensuring regulatory compliance.

In the case of an unexpected event such as a cyber-attack, infrastructure failure or natural disaster, the back office can be severely affected, and the strength of an organisation’s operational resilience can be exposed. Without a high level of operational resilience, an organisation may lose valuable data, suffer financial losses, and experience reputational damage. In catastrophic events, a lack of resilience may result in an organisation failing to recover from the effects of a before-mentioned event.

The importance of operational resilience cannot be overemphasised. It guarantees continuity of operations in the event of a failure, supports the organisation’s core operations, and ensures effective coordination between the front and back offices. This is crucial for the overall success of an organisation. It is also essential in today’s digital age, where businesses heavily rely on automation to drive their operations and functions.

A well-designed and well-executed operational resilience plan helps minimise downtime and maintain operations while mitigating risks. A resilient back office is also a critical factor in supporting the overall company culture. When employees understand that their jobs are secure amid unanticipated events, they are less likely to worry about the future of their roles. Operational resilience creates a sense of psychological safety and can boost employee morale.

In conclusion, investing in operational resilience planning and management ensures business continuity, mitigates risks, safeguards financial and reputational losses, and supports the overall company culture. Businesses that prioritise operational resilience have a competitive edge and can withstand unforeseen challenges and disruptions, especially in the post-trade industry.