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What is an Important Business Services and does the search for it cause IBS?

IBS is an unfortunate acronym but at Aldbury International we are already speaking to COOs who find that it has two possible meanings for them, as they struggle to decide how important a service has to be to be labelled an Important Business Service.

Since the FCA and the PRA released their respective Policy Statements on Operational Resilience at the end of March this year, the identification of a firm’s IBS has not just been an interesting exercise but has become a regulatory imperative. Without identifying your IBS, you cannot move on to the next stages, all of which need to be in place by 31 March 2022. In the face of this our experience is that a lot of firms are struggling.

Although the rules are not proscriptive (apart from the “just do it” aspect) there is a lot of guidance, but it needs to be interpreted. Accordingly, we see as many different ways of interpreting this as we have seen people doing the work. However, the common theme is that most firms are doing too much.

To pause for a second, from a purist “regulatory perspective”, can you ever do too much?

Well, yes you can in this case. To those who espouse the commercial regulatory perspective this is “mana from heaven”. Doing less costs less, takes less time and, if done well, can be even more effective than doing everything.

The challenge we hear from a lot of firms is that every head of department believes their part of the organisation is vital to the smooth operation of the firm. Most COOs, constrained by their internal perspective, are left scratching their heads wondering how to decide who is “first amongst equals”.

To avoid the stress that comes with this, we recommend going back to the source documentation from the regulators and then support COOs being brutal in striking out the not quite so important business services (note lack of capitals). The PRA and the FCA have different definitions, but they are complementary and reflect the different priorities of the two regulators.

This process avoids the most common mistake we come across. Services that should definitely be included in the mapping exercise that follows on from the identification of the IBS (as they are vital services without which the IBS could not take place), are themselves counted as an IBS.

The difference is subtle as the failure of one, disrupts the other.

Because of the sheer quantity of work that follows on from correctly identifying an IBS, it is vital for a firm (and the COOs sanity) to get this right. The FCA in their Policy Statement use an example of payroll to illustrate a vital supporting service that is not itself an IBS (unless of course you are providing payroll services to clients). Payroll is a good but obvious example. The challenge for most firms we have spoken to is in the more nuanced services.

Aldbury International brings a clear advantage to this process, as we are independent and agnostic onlookers. We can help ask the right questions to ensure that only the small number of true Important Business Services get through the net, thus ensuring that COOs don’t start suffering from stress related IBS or worse.

Read our latest case study

The client’s COO was struggling to understand how to address the large number of important business services they believed they had identified, while building their operational resilience programme.


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