FCA/PRA Operational Resilience Policy Statement published

The FCA and PRA published their consultation papers on Operational Resilience in late 2019 and in September 2020 the LMA responded to them on behalf of the market. An LMA Operational Resilience Forum was stood up to review the consultation, and from that a smaller Working Group (WG) was formed, tasked with writing up guidance for the market once the rules were published.

The WG has been working on that guidance, based on the principles set out in the Consultation Paper (CP), notably around Important Business Services and setting of Impact Tolerances. The final rules were published on 29 March 2021.

The WG will review the differences between the CP and the final rules and publish some guidance to the market at the end of April.

The guidance will contain:

A high level summary of the rules and context to the Lloyd's market
a library of Important Business Services which are expected to be common across all managing agents
high-level framework for an approach to setting impact tolerances
guide for how to map resources to Important Business Services
examples of how scenario testing may be carried out
a view from Lloyd's (see below).

Firms have until 31 March 2022 to implement the new rules, the 'implementation phase'. During this period the WG will continue to function, with a particular focus on:

Reaching across to brokers and company market to ensure a joined-up approach.
Defining a common market approach on setting impact tolerances for key third parties.
Working with key third parties such as DXC, LIMOSS, PPL to present a common market view.
Undertaking benchmarking of Managing Agent progress and playing this back to the market.

Lloyd's participates in the WG and will propose an approach to how they will oversee compliance with the requirements for operational resilience for the Society as a whole.

We will have a launch event for the guidance on Thursday 29 April with complimentary speakers from specialist firms.

You can find a link to the LMA Activity Tracker here (LMA Website sign-in required): Activity tracker - Finance and Risk.

Matt Wood
Head of Technology, Market Operations