A Buyer’s Guide to Resilience Management Software for Financial Services

Setting the scene

It’s hard to measure the exact size of the financial services sector, a large group of industries related to banking, lending, and the management of wealth and funds. But trustworthy estimates suggest that the industry might comprise as much as one quarter of the world economy.

In many advanced economies, the weight of the industry is even heavier. Home to the City of London, the U.K., for instance, boasts the fourth largest financial services industry in the entire Organization for Economic Cooperation and Development (OECD).

The country’s financial and insurances services sector contributed a staggering £208.2 billion to the national economy in 2023, according to the House of Commons library, making it the fourth largest industry in terms of national economic output.

In the larger EU economy, business in the financial and insurances activities sector generated €1 trillion of value added when last measured in 2021. According to data from the EU Commission, the industry employed nearly 5 million people across more than 759,000 enterprises.

The U.S., of course, remains the global leader in finance and insurance, exporting over $175 billion in financial services in 2023, according to the International Trade Administration. The sector employs more than 6.7 million people, with foreign direct investment (FDI) alone supporting more than 400,000 of those jobs.

The very large financial services sector

What makes the financial services sector so big is that it’s so diverse. Although differing by country, notable actors include central banks, depository organizations, credit unions, insurance, pension funds, and firms in financial intermediation or asset management. The sector also covers financial enterprises, markets, and payment systems.

What’s more, the rise of digitization in the global economy has seen the emergence of new players in finance, most prominently, fintech and insurtech, which McKinsey defines as companies that rely primarily on technology to conduct fundamental functions affecting how users store, save, borrow, invest, move, pay, and protect money.

Mounting compliance requirements in the financial services industry

Size alone would justify the sector’s importance. However, the range of activities financial services organizations provide, from banking to investing to insurance, also explains its influence. These are the very services by which consumers or businesses acquire the financial goods needed to stay afloat.

As a result, the health of the sector is a barometer for the health of the wider economy. It follows then that national and global regulators have a special interest in insuring that the sector stays solvent – an interest they have demonstrated in spades. Indeed, the financial services sector is one of the most heavily regulated sectors in the global economy.

Many might point to legislation like the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as its U.K. equivalent, the Financial Services (Banking Reform) Act. But it’s actually a spate of recent regulations that has dramatically upped the compliance burden on financial services organizations.

Coming out of the Covid crisis, many of the following regulations have been promulgated to address factors that heighten risk, such as increased cyber threats, expanding interconnectedness between firms, higher dependence on third parties and outsourcing arrangements, as well as mass remote working:

• EU: Digital Operational Resilience Act (DORA)
• U.S.: The Sound Practices to Strengthen Operational Resilience
• Australia: CPS 230: Operational Risk Management
• U.K.: PS21/3 Building Operational Resilience

If it weren’t clear by the titles alone, the watchword for this new regulatory trend is operational resilience, which the Bank of England defines as “the ability of firms and the financial sector as a whole to absorb and adapt to shocks and disruptions, rather than contribute to them.”

Is that not just business continuity? Not exactly.

Operational resilience extends beyond traditionally regulated practices like business continuity and disaster recovery to cover operational and third-party risk management, important business services, as well as governance and reporting. To achieve and maintain compliance, financial services organizations must therefore take a more holistic and integrated approach to resilience.

The risk and resilience software market for financial services

How can they do so efficiently? Digital software offers a tried-and-true tact.

In fact, financial services firms have long been at the cutting edge of software implementation to ensure compliance. However, compliance-led procurement has resulted in a relatively crowded market for risk and resilience software, with solutions offering much of the same functionality.

What stands out about our present compliance environment is that it requires flexibility and adaptability. So, what resilience management software capabilities fit the bill for firms seeking to achieve a comprehensive and holistic approach to resilience? To guide their search, we’ve composed the following software buyer’s guide for financial services organizations.

Resilience management software capabilities for financial services organizations

Configurability

Buyers in the financial services sector aren’t just looking for digital solutions to help meet regulatory requirements. They’re also looking for software that improves visibility, preserves business integrity, and promotes integrated resilience management. The only way to get that kind of solution, amidst an incredibly dynamic resilience environment, is to seek out configurable software.

What to look for, exactly? An adaptable software solution should come with an intuitive interface, extensive configurability (thanks to no-code, drag-and-drop designers,) and user-friendly design. The platform should also foster a strong, collaborative relationship between vendor and client to ensure alignment with the financial services organization’s needs.

Automation

Although compliance isn’t the only game in town, financial services organizations are still looking for solutions to help ensure compliance without having their people get bogged down in paperwork. To that end, buyers will need to look for a powerful workflow and automation platform that streamlines and simplifies the organization’s resilience processes and requirements.

Such a solution will help software buyers in the industry respond more quickly and efficiently to disruptive events, reduce manual effort and human intervention, as well as ensure consistency and reliability in critical tasks and processes.

Operational resilience

Financial services buyers are no doubt looking for software that helps connect the people, processes, and tools required to enhance operational resilience and minimize the impact of disruptions. So, one of the first operational resilience software capabilities to consider is important business services. More specifically, buyers should seek out software that defines and manages important business services, effectively maps end-to-end dependencies, sets and tests impact tolerances for disruption, as well as consolidates data to provide full transparency into the scope of the operational resilience program to ensure it remains in compliance.

Beyond helping to gain a holistic view of what matters most, operational resilience software should also enable financial services organizations to consider the severe but plausible scenarios that affect important business services, allowing the firm to maintain resilience by developing and testing specific recovery strategies and allocating the necessary resources ahead of time.

The solution should also facilitate the organization’s monitoring and reporting to demonstrate commitment through the creation of an operational resilience assessment report that tracks the progress made in ensuring resilience as well as provides real-time analytics to identify and address any potential vulnerabilities that may require rectification.

Business continuity

Operational resilience might not be business continuity, but quite a few operational resilience regulations have distinct business continuity requirements, from the business impact analysis (BIA) to the business continuity plan (BCP) to regular scenario testing.

To comply while building best-practice business continuity programs, financial services organizations shouldn’t have to buy stand-alone business continuity software that doesn’t integrate with the rest of their risk and resilience stack. Instead, they should consider an end-to-end resilience platform with streamlined, integrated, and automated business continuity functionality that enables the firm to remain prepared for adverse events and disruptions and facilitates engagement and collaboration across all stakeholders.

What capabilities to consider, specifically? We’d recommend looking for workflow-backed solutions that can streamline and simplify many key business continuity processes, to reduce the manual effort and human intervention needed throughout the business continuity management lifecycle. BIA-related workflows, in particular, should be able to guide stakeholders through the process step by step, ensuring not only consistency and reliability but also that the resultant BIAs are chock full of insightful data.

For business continuity managers, such powerful workflow and automation platforms will also simplify business continuity by streamlining time-consuming approvals; the platforms drive efficiency by automating real-time notifications and (even) recovery strategies to improve response times.

What else? Business continuity managers in the financial services sector should also be looking for solutions with dedicated functionality not only for digitizing the BIA and the BCP but also for monitoring, dependency mapping, recovery strategies, and scenario testing.

Indeed, the solution should provide real-time visibility into potential vulnerabilities, risks, and gaps to enable timely action to prevent or mitigate threats. That way business continuity managers will be able to test the effectiveness of their programs through exercises and facilitate continuous improvements from lessons learned and insights to refine strategies and processes.

Disaster recovery

What about disaster recovery? Well, certain continuity and resilience solutions do come with integrated disaster recovery capabilities. These capabilities enable business continuity and IT/DR teams to work together harmoniously in an integrated workspace to establish a unified disaster recovery template that defines plans, formulates response strategies, assigns roles and responsibilities, all while making use of pre-assigned checklists to get the process rolling quickly.

Like with business continuity, these solutions simplify disaster recovery by mapping critical IT assets directly to essential functions of the organization, thereby offering a comprehensive view of operational dependencies that helps decision makers quickly identify and prioritize recovery efforts.

Operational and third-party risk management

Risk management is another important component of sectoral regulations. However, relevant requirements cut in two directions, often requiring firms to buy separate solutions.

CPS 230, for instance, is organized, in the main, around operational risk. Meanwhile, its statutes concerning service provider management are geared toward third-party risk management requirements. Suffice it to say, resilience software for financial services organizations must treat both.

On the one side, operational risk management capabilities should help organizations proactively identify, assess, and mitigate the potential risks that could cause operational failures or disruptions. Key, here, is functionality to help financial services organizations gain a comprehensive and holistic view of their risks by centralizing all operational risk-related data, visually mapping risks through interactive dashboards, charts, and heatmaps, and providing advanced analytics and reporting to analyze risk data and assess the effectiveness of risk mitigation efforts.

Operational risk management software should also work to streamline operational risk management processes with standardized workflows and templates. This functionality will not only help save time and increase standardization for better insights but also promote effective teamwork and knowledge sharing.

Many of the insights can be pulled over onto the third-party risk management side of the ledger, too. However, integrated third-party risk management software has its own role to play, particularly as regulators crack down on increased service provider risk. Solutions must, therefore, help financial services organizations pinpoint and address the top issues across their vendor ecosystem.

What capabilities, specifically? Software should simplify the onboarding process for third parties; and once those parties are onboarded, service details, contracts, and risk assessments should be able to be set up in collaboration with vendors to ensure alignment between parties. Bringing vendors into a wider resilience workspace, which certain solutions enable, only serves to further that alignment.

In addition, the software should also support ongoing monitoring of third parties to ensure financial services organizations have the right data to improve the resilience of their third-party ecosystem – be that through automated document and questionnaire updates, third-party status updates, risk assessment and action monitoring, and/or risk intelligence.  

Crisis management and mass communications

As we’ve stressed, financial services organizations can’t just approach risk and resilience software procurement from a strictly compliance perspective. They must consider the broader resilience picture, in which critical incidents (be they severe-weather events, cyber-attacks, political instability, or other) are on the precipitous rise.

To that end, resilience software vendors should demonstrate a solid foundation in critical response scenarios, showcasing powerful capabilities in real-time communication, incident tracking, and resource management. Indeed, resilience software must prepare financial services organizations for effective emergency response, with the aim of safeguarding their operations and assets.

For that reason, the platforms must excel in managing incidents from onset to closure, seamlessly gathering data, generating reports, and automating communications across the incident lifecycle. Upon incident resolution, post-mortem functionality should also be available to provide a comprehensive overview of how an incident was handled, highlighting opportunities for continuous improvement through documented action items.

Of course, part of managing crises is communication. Solutions must, therefore, be able to help financial services organizations proactively ensure all stakeholders are alerted to threats and incidents quickly, via the best methods to reach them. Mass communications capabilities that fit this requirement include:

• • SMS, email, as well as voice and app notifications
  • Pre-planned message templates
  • Targeted communications
  • Location-based messaging
  • Message (response) management

Security incident management

A final piece of the resilience picture is managing security incidents, specifically cyber-incidents as the industry remains one of the top targets of cyber-attacks. For instance, a staggering 65% of financial services organizations were hit by ransomware in 2024, with the mean cost to recover from those attacks standing at $2.58 million, according to a Sophos-conducted survey of the industry.

Cleary then, resilience software must help organizations proactively safeguard their people, assets, and reputations. Key capabilities, here, are actionable threat intelligence, enhanced situational awareness, and robust incident reporting to restore normal operations quickly.

Beyond quickly detecting threats with actionable intelligence, financial services organizations will need functionality, such as automated notifications that assign response plans to accelerate the response. Firms should also seek out solutions that help them unlock operational insights and improve decision making.

What capabilities, exactly? Resilience software should be able to consolidate data across threat intelligence, security monitoring systems, and incident management to generate real-time analytics and insights for security teams to proactively identify emerging threats, prevent incidents where possible, and keep stakeholders informed for better decision-making.

Finally, risk and resilience software has never been more important to the financial services industry as sectoral regulators maintain ever-higher levels of operational resilience. But not all software solutions enable financial services organizations to comply with the spirit of those regulations, which call for improved visibility, higher business integrity, and the cultivation of integrated resilience management.

Noggin does. An integrated resilience workspace, Noggin seamlessly integrates 10 core solutions, including operational resilience, business continuity, third-party and operational risk management, as well as crisis management and mass communications, into one, easy-to-use software platform.

With industry-leading, award-winning functionality, Noggin helps provide financial service organizations with a comprehensive and holistic approach to resilience, while facilitating crucial collaboration and coordination, unlocking critical insights, and keeping stakeholders informed.

Don’t just take our word for it, though. See Noggin in action for yourself by requesting a software demonstration.