Mario De Bergolis and Angus Milne discuss operational resilience at Fund Operator Summit Europe.

Operational resilience is changing

Day two of Fund Operator Summit Europe kicked off with a discussion on how the market can cope with changing norms and how best to work with them. Operational resilience remains a hot topic in a world increasingly affected by black swan events – major, disruptive incidents that deliver swift changes to societies and economies.

At the day’s first panel discussion, leading Chief Operating Officers said that planning for the most likely implications or outcomes of black swan events is more productive than attempting to predict the events themselves. 

"Most importantly, organisations need to make sure that they have the capacity to make changes."

On a panel that included Mario De Bergolis, Chief Operating Officer, Asset Management One International and Angus Milne, Director Risk and Compliance, TCI Fund Management, the consensus was that operational resilience should take precedence for fund operators and companies now more than ever before.

Asked how the focus around operational resilience has shifted in recent years, Milne said that there's been progress, but more changes are still necessary. "Most importantly,” he said, “organisations need to make sure that they have the capacity to make changes.” and while it does help to be a profitable company with substantial implementation capacity, smaller companies can focus on careful monitoring and planning.

However, if companies do not have the resources – for example, time, capital, or adequate staffing – to successfully implement large-scale changes, they should be cautious about doing so, Milne said. It’s about knowing, from front to back, what your company's individual profile looks like and how to navigate your capacities and limitations.

Consider implications not events

"We need to identify our single failure point. We need to ask ourselves where our weaknesses lie and how we can better identify them.” 

De Bergolis took a slightly different stance, saying that recent work-from-home (WFH) developments due to Covid-19 have significantly changed the landscape around operational resilience – and have key implications for what the term must now include under its umbrella.

"We need to identify our single failure point," he said, adding that an organisation's ability to seamlessly shift to a WFH model during the global pandemic meant sink or swim. That knowledge is critical looking forward: "we need to ask ourselves where our weaknesses lie and how we can better identify them.” 

Milne added that the inability to access office space is one significant implication of potential future events that firms must prepare for. Another key implication is losing access to cellular data or electronic trading. Fund operators and managers need to know now – not later – how they will tackle these issues, should they occur. 

Both panellists agreed that the best way to mitigate such risks is to consistently conduct internal audits, mock exercises, and drills with third-party providers. This standardisation of procedures is especially important when considering the increasing frequency of cyber-attacks and other tricky digital situations,

Data-related events, more broadly, were considered one of the most likely risks of the near future – alongside sovereign conflicts, such as the ongoing war in Ukraine.

Operational resilience in these cases means ensuring that risk is anticipated and mitigated across entire supply chains and throughout entire workflows, specifically when an organisation outsources or employs third-party providers.

The event will continue tomorrow, with a forum on recent trends and developments in human resource operations. For details, click here.

 

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