Financial Resilience
- Anthony Peccia
- Oct 10, 2024
- 1 min read
Financial Resilience is having sufficient financial resources to withstand losses while continuing to operate.
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Financial Resilience is having sufficient financial resources to withstand losses while continuing to operate.
How can financial institutions build a resilience framework that not only addresses immediate operational disruptions (e.g., cyber-attacks, natural disasters) but also prepares them for prolonged systemic shocks (such as pandemic-level events) without compromising profitability?
Does self-insurance (e.g., setting aside funds in case of an accident because traditional insurance costs are too high) fall under capital or insurance? Is insurance always provided by an external party, or can it involve shifting risk within different parts of a bank?
For availability, preventive maintenance and real-time monitoring are highlighted as key controls. What are the potential trade-offs between maintaining high availability and ensuring robust security? How might an organization find a balance that minimizes disruptions without compromising security?
In determining whether or not to buy the insurance, would a company need to do an analysis such as NPV analysis to calculate the possibility of the loss events and the magnitude of the losses? Would companies always want to include insurance to demonstrate their financial resilience? Or otherwise, they have to prepare the funds such that they can absorb all of the potential losses due to a certain type of incidents? Would it always be beneficial to buy insurance?