The Prudential Regulation Authority (PRA) recently revealed its strategy, work plan, and budget for 2022/23. PRA operational resilience is a key objective in its business plan, focusing predominantly on improving its level of resilience, as well as fostering a risk-conscious culture, where individuals are constantly evaluating risk and taking calculated risks based on empirical data.
The PRA pledges to “Be at the forefront of identifying new and emerging risks and developing international policy.” This shift to a more risk-vigilant mindset plays a crucial role in the PRA’s ongoing procedures and newer models in the future, especially as it navigates an increasingly volatile market. It also stated its determined ability to remain flexible despite possible economic and market developments post-COVID, which has caused many disruptions to supply chains as well as inflation.
While risk is an unavoidable part of business, the PRA stresses the importance of identifying, monitoring and minimizing the exposure to risk among every aspect of your business – from internal practices and procedures, to third party services. The PRA also plans to exercise risk management as a key part of its practices as well as eliminating dangerous practices.
Prioritizing risk management will also allow the PRA to make adjustments regarding underperforming practices or procedures that fail to meet objective goals. This also helps meet its other key objective to create a strong and simple regime. This strategic approach will allow the PRA to view its practices through a larger scope; a global view of policies and procedures that may be affected by unforeseen risks impacted by the economic landscape and ever- changing market variables.
Highlighted in the PRA Business Plan for 2021/22, is its goal to introduce a simpler but resilient prudential framework for smaller, non-systemic banks. Maintaining a continuously improved level of resilience is a goal of the PRA, but should be one for all businesses.
Operational resilience remains a key factor in the PRAs business plan moving forward. As a leader in the industry, this serves to underscore both the need to practice operational resilience as well as its importance in all business practices. This more dextrous, proactive attitude towards risk ensures a more confident ability to rebound stronger from any event.
The PRA continues to lead as an example of exceptional risk-management at a high level. As an organization grows, so do its vulnerabilities, as these businesses come to rely on so many out-sourced services and providers that are beyond its control. However, business organizations can control their approach to risk, how they respond to it, and the practices it puts in place to avoid it.
Operational resilience continues to climb among businesses of all levels as a core principle to maintain peak performance. More organizations continue to practice risk management as a critical role in evaluating its overall effectiveness and exposure to the likelihood of harm. Companies of all sizes should continue to propose risk management and operational resilience practices to put them in the best position for success.