What is business continuity management?
The Federal Financial Institutions Examination Council (FFIEC) is an interagency group that sets standards and principles for the federal examination of financial institutions. Per the FFIEC, “Business continuity management (BCM) is the process for management to oversee and implement resilience, continuity, and response capabilities to safeguard employees, customers, and products and services. Disruptions such as cyber events, natural disasters, or man-made events can interrupt an entity’s operations and can have a broader impact on the financial sector. Resilience incorporates proactive measures to mitigate disruptive events and evaluate an entity’s recovery capabilities.”
Business continuity is a proactive process designed to ensure that an organization can continue to operate and deliver critical services during and after a disruptive event. The goal of business continuity is to minimize the impact of these disruptions, ensuring that the organization can maintain essential functions and recover swiftly to normal operations.
The diagram linked here from the FFIEC maps out the lifecycle of robust business continuity management.
Benefits of business continuity in financial services
The financial services industry is particularly vulnerable to disruptions due to its reliance on technology and the critical nature of its services. For internal auditors, here are some important areas to include in the audit planning process:
- Operational resilience: Business continuity planning ensures that critical operations can continue despite disruptions. Reliable access to banking services ensures financial stability for customers. It allows them to manage their finances effectively, make timely payments, and avoid potential financial difficulties caused by service disruptions. This is vital for maintaining the smooth functioning of financial markets and preventing systemic risks.
- Customer trust: Financial institutions handle sensitive information and manage significant financial transactions. A disruption in services can erode customer trust and lead to substantial financial losses.
- Regulatory compliance: Regulatory bodies — such as the Federal Financial Institutions Examination Council (FFIEC) and the Financial Industry Regulatory Authority (FINRA)— mandate financial institutions to have robust business continuity management, including plans and testing. Failure to comply can result in severe penalties and loss of credibility. See FINRA requirements here and FFIEC requirements here.
