What is operational resilience?

Major disruptive events—whether it be cyberattacks, power outages or system failures—are inevitable. No organization or enterprise is immune. Operational resilience goes beyond traditional disaster recovery by proactively managing unforeseen events. This approach requires identifying which services are most important to the business and ensuring they remain stable and recover quickly.

Enterprises are increasingly addressing the need for operational resilience. According to research from BCI and Riskonnect, 70% of organizations now have operational resilience programs and an additional 10% are in the process of developing one.¹ Adherence to best practices is the most common driver for developing these strategies, with regulatory compliance ranked second.

While operational resilience is vital to all businesses, certain industries require robust capabilities. Financial institutions are especially vulnerable to security incidents and cyber risks. They must protect customer data, maintain financial system stability and meet strict regulations, or else risk losing their reputation and customer trust. Similarly, healthcare organizations are responsible with ensuring continuity of care during adverse events while also meeting privacy requirements for sensitive patient data.

Operational resilience has become mission-critical in modern business for numerous reasons. In an “always-on” digital world, organizations are expected to weather any operational disruption, with every second of downtime resulting in financial loss, security vulnerabilities and business risk.

Major catastrophic events, whether pandemics or natural disasters, have brought the need for operational resilience into sharp focus. Also, regulatory activity worldwide is increasing, with government and other authorities issuing guidance, laws and regulations to ensure that enterprises can anticipate and recover quickly from adverse events.

As businesses steadily implement artificial intelligence (AI) and rely on partnerships to remain competitive, organizations must ensure that these dependencies meet the same information security, resiliency and control standards they and their regulators demand.

The cyberthreat landscape is also evolving. According to the 2024 IBM X-Force® Threat Intelligence Index, attackers are moving from ransomware to malware designed to steal information.

Regardless of the industry, trust and security must be at the foundation of decision-making regarding where workloads and data reside.

Operational resilience, business continuity management (BCM) and disaster recovery (DR) are all strategies for protecting businesses, but they are distinct processes.

A business continuity strategy refers to an organization’s ability to maintain crucial business functions and resume normal operations with minimal downtime in the face of a crisis. BCM focuses on creating detailed plans and procedures to ensure that essential business processes can continue during supply chain failures, pandemics or other unexpected incidents.

Disaster recovery plans are more technical and IT-focused. DR consists of IT technologies and best practices designed to prevent or minimize data loss and business disruption resulting from catastrophic events like equipment failures, cyberattacks or facility damage.

It focuses on isolated points of failure that could disrupt critical operations, typically in a data center, whether on-premises or in the cloud. DR establishes specific Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO) for restoring information systems and data.

It’s worth noting that business continuity and disaster recovery (BCDR) are often combined into integrated strategies, but they can also be used separately depending on business objectives.

An operational resilience plan is a broader strategy that refers to a business’s ability to predict, maintain and restore its critical services and functions in the face of a challenge. While DR and BCM typically focus on specific scenarios and recovery plans, operational resilience encompasses the full spectrum of factors (for example, people, processes, technology, supply chain) that support business service operations and delivery. It has evolved to address increasingly sophisticated threats.

In recent years, operational resilience has become a regulatory priority for governments and other entities around the world. It guides highly regulated industries (for example, financial services firms, financial market infrastructures) as they manage requirements for privacy, cyber resiliency, security and data sovereignty.

To protect the public interest, these regulatory bodies have established standardized practices to ensure that organizations understand their vulnerabilities and invest in protective measures for financial stability.

In the United States, the Federal Reserve and other banking regulators have issued guidance on operational resilience practices. Internationally, regulations like the European Union’s Digital Operational Resilience Act (DORA) have created binding, comprehensive information and communication technology (ICT) risk management frameworks for financial institutions and their critical third-party technology service providers.

Operational resilience requires a holistic approach across interconnected areas that include:

• Risk management framework: Operational risk management practices form the foundation against both internal and external threats. Organizations must continuously identify, assess and mitigate operational risk exposure, ranging from human error to technology and system failures. Effective risk management enables organizations to anticipate potential risks and develop strategies to reduce their impact.
• Technology and systems: Building a robust information technology (IT) infrastructure is essential. IT systems, applications, data and cybersecurity controls must be strong enough to withstand interruptions and recover quickly if operational incidents occur.
• People and processes: Skilled employees, well-defined procedures and effective training ensure that all stakeholders can respond appropriately during crises and maintain crucial functions and digital sovereignty.
• Facilities and infrastructure: Physical locations like data centers, power systems and networking infrastructure must be protected and equipped with backup capabilities to support disaster recovery and business continuity.
• Third-party dependencies: Vendors, cloud service providers and outsourcing partners introduce dependencies that require third-party risk management practices to ensure that they meet resilience standards.

Organizations build operational resilience across all major areas through a continuous, proactive four-stage lifecycle.

Enterprises must identify critical business functions, potential threats and vulnerabilities across their entire IT system (for example, on-premises, private cloud, sovereign cloud, public cloud, edge).

This approach involves conducting cyber risk assessments, threat modeling and business impact analyses (BIA) to identify potential vulnerabilities and important functions.

This stage develops and implements strategies to halt or lessen the impact of potential disruptions. It involves integrating strong security policies, employee training and specialized IT solutions to prevent incidents.

This stage refers to activating incident response and business continuity plans to manage an ongoing crisis and restore essential functions quickly.

The goal is to minimize sudden impact and shocks and ensure continuity of vital services.

After an incident, organizations must analyze what occurred, collect data, review the plan’s effectiveness and remediate identified gaps to improve their resilience capabilities.

Converting operational resilience into practice requires a coherent strategy that incorporates the entire system—internal teams, processes, technology systems and third- and fourth-party entities.

Many organizations experience obstacles like siloed data, legacy infrastructure and the complexity of stress testing at scale without disrupting critical business operations.

An all-encompassing plan handles these problems through the key steps presented further ahead.

Start by mapping which services are essential to your business and would cause the most significant harm if disrupted. Establish impact tolerances and metrics. 

It’s important not to focus solely on the technical considerations of the business; make sure that you consider the impact on customers, revenue and reputation.

Document how systems, people and processes connect. Understanding this interconnectedness and interdependency helps identify potential chain reactions, such as a third-party service provider outage affecting multiple internal systems simultaneously.

Modern dependency-mapping tools can automate visibility across complex, distributed environments.

Identify significant points of failure, such as reliance on a single data center. Create common risk language across the organization by using standardized terminology and risk rating scales that enable consistent communication among technical teams, business leaders and the board.

Consider both traditional threats (for example, hardware failures) and emerging threats (for example, sophisticated malware). AI-driven monitoring and analytics can help discover vulnerabilities and potential failure points across critical infrastructure.

Create a data governance framework that designates clear senior management ownership. Assign clear roles and responsibilities (with accountability measures) to prioritize operational resilience activities.

Leadership should also establish the organization’s risk appetite to determine resilience investments and priorities.

Conduct scenario testing to validate your response capabilities. Frequent drills and exercises help ensure teams are prepared and contingency plans remain effective if cyber incidents or disruptions occur.

Actual incidents and testing exercises help identify gaps. Routine assessments and modifications help strengthen resilience capabilities and keep pace with ongoing threats and business changes.

Build compliance into your strategy right from the start. Align your business with appropriate regulations and use industry frameworks like NIST.

Automated compliance monitoring can help demonstrate ongoing conformance to regulatory requirements.