Covid19 & Business continuity in financial services

All FCA regulated firms need to have a business continuity plan and should test it regularly to ensure it is effective. As such, on the face of it, there should be an expectation that regulated financial services firms in the UK are well positioned to cope with any shutdown of their physical offices. I was recently quoted in an article on Ignites about the impact of BCPs in financial services.

Some firms will have BCP protocols which involve relocating a number of staff to a specific backup location, and such arrangements are unlikely to be practicable in the current situation, and that is the issue my input to the article considers. 

More broadly, I expect the majority of firms to have the ability to have staff work remotely, and thereby continue operating. But, not all firms may have in place the BCP which would be expected of them. The risk here is that such firms are simply unable to function in a BCP scenario.

However, modern communications and storage arrangements should mean that workers can work remotely, and many firms should be able to broadly work on that basis. Of course, the effect of invoking BCP may be different for different types of firms. For example, I'd expect a corporate finance house to be more affected as their work would usually require more meetings and face-to-face collaboration than, say, an execution desk at a fund manager who could operate under BCP quite usually as much of their work to be conducted via a computer and screen and to be less dependent on co-location of staff.

Even properly prepared firms may experience some teething problems and unexpected issues to be addressed, but these should only occasionally be business critical. 

Also, it may be that not all staff at all firms will be able (or required) to work remotely. Can a firm operate fully without all its staff? If not, what will be the effect of a firm operating for a potentially prolonged period of time at less than full operation? This could lead to firms being less productive and having less capacity. On the flip side, it could mean that a firm operates in a novel and more agile way than previously seemed possible, thereby leading the firm to embrace a new way of working. 

Operating under BCP conditions may be viable for a short period of time, but as time goes by it could lead to costs to firms. For example, firms will be paying for premises, but they won't be using them. As time passes, firms may wish to look closely at such matters.