Operational Resilience – the Culture Conundrum

Culture is key to compliance

The early results of Sionic’s Market Insights Survey 2023* on Operational Resilience indicate that nearly 50% of participants believe there is further work to be done to fully embed a culture of resiliency across their firms.

*The full survey results are due to be published in May. 

Meanwhile, let’s take a closer look at some of the reasons why firms continue to find themselves in this predicament.

The culture code

What is culture? Put simply, we believe culture is behaviour at scale. It is a unique combination of the learnt behaviours, norms and processes of a defined group. It is the sequence that carefully synchronises purpose, collaboration and connection. It is the basis from which groups operate and an identity that creates belonging.

The culture conundrum

There is a myriad of articles, books, podcasts and courses, each with its unique interpretation of ‘culture’. While there may be some divergent perspectives, most agree with the fundamental notions that culture is important, drives behaviour, requires continuous investment and evolves over time.  And yet, if we understand the importance of culture, and how it intricately and systematically drives groups towards a common purpose, why do we struggle to embed it?

A culture does not develop overnight. It takes deliberate focus and time. Culture also evolves over time as habits and circumstances change.

If we shift our focus from culture in general, to cultures within organisations, focusing specifically on the financial services industry, we understand the importance of adaption by firms to remain competitive and at the forefront of market trends. Changes in our industry are often precipitated by new knowledge, technology developments and enhanced regulation. Culture needs to be the north star throughout these evolutions, with subtle tweaks along the way.

What does the industry say?

While firms grapple with a plethora of change, particularly in regulation, they should now have a well-founded grip on operational resilience. In order to validate this, Sionic conducted an Operational Resilience Market survey in 2023 with a cross-section of participants within the wealth management and private banking sectors as firms are now within their first year of the transitionary period in light of the final regulatory deadline of 31 March 2025.

In understanding the importance of culture and how it sets the tone for a firm, we asked survey participants if they believed there is a resilient culture embedded across their own organisations. Interestingly, nearly half of survey participants indicated that there is further work to be done to fully embed a resilient culture across their firms.

In our previous market insights survey conducted in 2022, the majority of participating firms had appointed an accountable individual to lead the operational resilience programme.

  • Most firms had either appointed their SMF24 accountable person or equivalent to take overall accountability for operational resilience and tasked them with the responsibility of driving engagement across the organisation, operating as the connection between the board’s obligations and the role of the wider business.
  • 80% of these firms had also previously indicated that their boards are aware of their responsibilities in relation to operational resilience and were supportive of the firms’ operational resilience strategy. This showed us that the tone is set from the top and ownership is clear with accountability sitting appropriately at senior levels.

Progress isn’t always forwards

Strikingly, when we assessed the results of our two surveys, conducted a year apart, we actually identified a regression in how operational resilience is embedded into firms’ cultures. Fewer firms in 2023 indicated that operational resilience is fully embedded in their cultures.

So, if firms have appropriate ownership structures and the tone is set at the top, why is it so challenging to create and maintain a unique culture code from which all can operate to ensure operational resilience is adequately embedded in a firm’s culture?

Culture clues

In our experience, there may be many reasons as to why firms have found embedding an operational resilient culture such a challenge.

  • Change takes effort. It challenges organisations to shift thinking and approaches, drains resources and shifts priorities. In a competitive world, resources and time are finite – so firms’ ability to absorb change simultaneously and prioritise effectively can be stifled.
  • Change is sometimes seen as a once off rodeo. This could not be further from the truth – change is iterative, fluid and requires consistent cultural reiteration.
  • Even with the best intentions, firms place efforts on the ‘fire’ at hand and once that’s out, the next fire becomes the focus. They fail to engrain the change into their fabric.

The three critical C’s for an operationally resilient culture

While there is no award-winning solution to build a resilient culture, there are key principles that can be adopted and applied in a manner that resonates with the firm’s cultural uniqueness.

  • Conscious to be unconscious Creating and maintaining a culture takes a conscious and deliberate effort. It requires firms to embed operational resilience into their DNA – their strategy, communications and ways of operating. It requires consciousness at both an organisational level and individual level. A top-down affirmation of importance and understanding drives individual understanding. Individual understanding propels organisations towards their set beliefs, values and norms. A learnt behaviour becomes an unconscious behaviour. Being consciously deliberate in your firm’s efforts will ultimately drive unconscious, aligned behaviours.
  • Continuous cultivation Malcom Gladwell’s book Outliers solidifies the theory of the ‘10,000 hour rule’ – suggesting that in any kind of cognitively complex field you cannot be good unless you have practised for 10,000 hours or more. This principle would adequately apply to creating an operational resilient culture. The core muscle of the firm needs to be trained to implement new policy standards and to improve the standards of resilience. It takes continuous cultivation of iterative reinforcement, learning and adaption. Once is not enough.
  • Clear consistent communication Lastly, be unequivocally clear and consistent in your communication. Communicate in a way that does not cause confusion around the firm’s approach to operational resilience and individuals’ responsibility. Encourage open communication from all staff and incorporate this into the firm’s learning process.

In conclusion

A culture of resilience binds together individual mindsets with the firm’s values, beliefs and expected behaviours to boost the ability to anticipate, prepare, respond and learn in the face of disruption. It is key for organisations to be clear about the behaviours they want to encourage and continuously measure the maturity of these behaviours. The right unconscious behaviours, continuous reinforcement and collaboration in operational resilience will lead to a more holistic approach and embedding of operational resilience.

Discover more

Our award-winning team of specialists advises firms internationally on all aspects of operational resilience. If you would like to discuss any aspect of this article or our practical approach, please contact us.

Read the previous articles in this series:

Download the results of our previous survey:

Read more on these topics:

Meet the author

Tracie Harbinson

Principal consultant

I am an experienced leader and multi skilled financial services professional with a passion for thought leadership, collaboration and innovation.

Hannah Whyburd

Senior consultant

I have worked with a range of large wealth management firms and financial planners.