Success is Failure but Failure is Success

In the world of Operational Resilience, failure isn’t something to avoid - it’s something to learn from. This article explores why regulators such as the FCA and PRA expect firms to test beyond the point of failure, how effective crisis management teams respond under pressure, and why true resilience is built through challenge, not comfort.

Success is failure, but failure is success

The title may sound contradictory, but in the context of Operational Resilience, it captures a fundamental truth recognised by both the FCA and PRA. When it comes to testing the limits of resilience, failure can in fact be a measure of success.

The role of failure in Operational Resilience

Under the FCA and PRA’s Operational Resilience framework, firms must maintain a structured testing plan and regularly run “severe but plausible” scenarios. These exercises should grow in complexity over time, involve the Crisis Management Team (CMT) and crucially, test Impact Tolerances beyond the point of failure.

Impact Tolerances represent the point at which disruption to an Important Business Service causes intolerable harm to customers. While the definition can be subjective, most firms have established Early Warning Indicators to signal when intervention is needed before that threshold is breached.

Testing “beyond the point of failure” means deliberately pushing the organisation past its operational limits. Although challenging, this level of testing is precisely what the regulators expect.

Recent disruptions across major organisations - including incidents affecting retail, manufacturing and cloud service providers - serve as clear reminders of how a single failure can cascade across industries.

The true test of crisis management

Testing at this level also highlights the value of a well-prepared Crisis Management Team. An effective CMT understands which actions to prioritise, the importance of clear internal and external communication and how to operate cohesively under pressure, even when information is incomplete or rapidly changing.

A well-trained team will have rehearsed multiple scenarios, refine their response processes and develop the ability to make effective decisions under stress.

Why failure equals success

Testing is only truly successful when it challenges the business to - and beyond - its Impact Tolerances. Exercises that fall short of this threshold offer limited value and miss opportunities to strengthen organisational resilience.

The FCA and PRA have made their expectations explicit: firms that have not yet tested to this level are now required to do so. This is not a discretionary exercise but a regulatory necessity and a key driver of long-term stability.

How Aldbury International can help

Aldbury International has extensive experience in designing and delivering tailored testing programmes - from tabletop walkthroughs that establish foundational understanding, to immersive, no-notice simulations that replicate the pressures of a real-world crisis.

Each exercise is developed to enhance team performance, build confidence and turn potential weaknesses into strengths - helping firms transform failure into resilience.

To learn more about our operational resilience and crisis management support call 020 3475 2953.