Operational Resilience in Japan 2023

[Celent Survey] Operational Resilience in Japan 2023

• Celent regularly conducts surveys on various trends in the financial industry. In this survey, we examine trends in priorities in Operational Resilience (OR).
• The survey consists of 10 questions and will take approximately 10 minutes to complete. All responses will be statistically tabulated and included in our survey report. When we include the survey results in the report, we will not disclose any information that could identify individuals or companies. Those who participate in the survey will receive a summary report of the results at a later date. We would like to hear about your company's initiatives.
• Click here to participate in the online Celent Survey―Operational Resilience in Japan 2023

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This spring’s collapse of Silicon Valley Bank (SVB) and First Republic Bank (FRB) and the demise of Credit Suisse have reaffirmed the significant threat to the ability of financial institutions to conduct operations without interruption. Over the past 25 years, several crises have severely threatened the viability of the financial services system, beginning with the September 11 attacks in 2001 and the global financial crisis in 2008, followed by the pandemic in 2020 and the cryptocurrency meltdown in 2022.

In 2022, regulators around the world announced a new framework to instill greater operational resilience as a way to mitigate systemic risk across the financial services sector. Regulations vary by region, but all combine multiple aspects of operational risk into one framework, designate business services as critical or very critical, and integrate a mandated risk management approach and response to systemic failure across a financial institution’s organization.

Japan’s Financial Services Agency (JFSA) has already disclosed its overall risk management approach and the way forward for financial institutions, including an approach related to systemic risk, in its June 2018 discussion paper, “JFSA’s supervisory approaches.” In addition—in light of global discussions, such as the "Principles for Operational Resilience“ by the Basel Committee on Banking Supervision in March 2021, and the importance of ensuring the ability of financial institutions to continue to provide critical operations at the minimum level required—in April 2023, JFSA released its “Discussion Paper on Ensuring Operational Resilience” and outlined its policy of deepening dialogue with a wide range of stakeholders.

Following a series of such global discussions and responses by Japanese regulators, Celent is now conducting a survey, "Operational Resilience in Japan." The survey consists of 10 questions and will take approximately 10 minutes to complete. All responses will be statistically tabulated and incorporated into our survey report. Survey results provided in the report will not disclose any information that could identify individuals or companies. Those who cooperate in the survey will be provided with a summary report of the survey results at a later date. Through the survey, we hope to learn about each company’s various risk management approaches.

In line with the definitions in the JFSA’s discussion paper, in this survey we also recognize the following basic processes of operational resilience:

1. Identify the “critical operations.”
2. Set the “tolerance for disruption” (minimum level of the critical operations that needs to be maintained to mitigate the impact on the financial system and users within a certain range in the event of a business disruption).
3. Map the interconnectedness of the firm’s internal and external business processes and secure the necessary management resources (human, material, and financial resources).
4. Check sufficiency through periodic reviews such as training and testing, and learn and adapt, taking additional actions to address identified vulnerabilities.