When Heathrow Airport recently suffered a major power outage, it was more than just another operational hiccup—it was a stark reminder of the fragility of interconnected systems. Thousands of passengers were stranded, cascading delays rippled across the globe, and the economic impact was significant.
For financial institutions, the parallels are clear. The unexpected will happen. The question is: Are firms truly prepared for disruption? The Heathrow incident underscores why operational resilience is no longer a “nice-to-have”—it is a strategic imperative.
Regulatory Pressure: SS1/21 and DORA Are Raising the Bar
Global financial institutions operate in an increasingly complex regulatory landscape, particularly in the UK and EU. Two frameworks—Supervisory Statement SS1/21 (issued by the UK Prudential Regulation Authority) and the EU’s Digital Operational Resilience Act (DORA)—are redefining how firms approach resilience.
SS1/21 (UK): Introduced in 2021, this regulation mandates firms to identify critical business services, set impact tolerances, and demonstrate that they can operate within those thresholds. With the final compliance deadline of March 31, 2025, financial firms must accelerate their efforts to meet these expectations.
DORA (EU): Expanding beyond financial entities, DORA introduces strict ICT risk management and resilience testing requirements, covering both financial firms and third-party providers delivering essential services. UK-based banks servicing EU clients must ensure compliance with DORA to avoid regulatory penalties.
Both regulations aim to strengthen financial stability and safeguard public confidence by ensuring institutions can anticipate, absorb, and recover from disruptions.
Given the increasing reliance on third-party providers, firms must ensure that their partners meet the highest standards of security and resilience. This is why many institutions are turning to ISO 27001-certified vendors, such as Custodia, to enhance their market abuse surveillance capabilities, as well as ensuring their operational resilience compliance. By partnering with a vendor that adheres to internationally recognised security standards, firms can strengthen their ability to manage cyber threats and regulatory requirements effectively.
The Growing Challenge of Third-Party Risk
Many firms rely heavily on legacy IT systems and third-party providers to deliver core financial services. However, third-party failures pose systemic risks—a reality recognized by regulators.
The UK’s Critical Third-Party (CTP) Oversight Regime, effective January 1, 2025, introduces direct regulatory scrutiny over third-party providers essential to financial firms. In contrast, DORA places the burden on financial firms to manage and test ICT risks within their supply chains. This divergence forces cross-border firms to navigate dual compliance obligations, ensuring that their third-party arrangements meet the stringent standards of both frameworks.
The Cost of Inaction: What’s at Stake?
Ignoring operational resilience obligations isn’t just a compliance risk—it’s a business risk. The potential consequences include:
- Regulatory Penalties – Non-compliance with SS1/21 or DORA can result in fines, enforcement actions, and reputational damage.
- Financial and Reputational Harm – Operational failures shake customer trust, requiring substantial investments to rebuild credibility.
- Increased Cyber and Operational Risk – Weak resilience measures expose firms to cyberattacks, data breaches, and systemic failures.
- Third-Party Vulnerabilities – Insufficient oversight of external providers can amplify disruptions, as seen in past outages affecting major payment networks.
- Technical Debt Accumulation – Delayed resilience investments make future upgrades more complex and costly.
With SS1/21’s March 2025 deadline fast approaching and DORA coming into effect in January 2025, financial institutions must act now or risk regulatory and market repercussions.
Transforming Operational Resilience into a Competitive Advantage
The reality is clear: disruptions are inevitable. But financial firms that embed resilience into their operating models can turn compliance into a strategic advantage.
- Proactive Scenario Testing – Firms should go beyond regulatory minimums and stress-test their real-world response capabilities.
- Enhanced Third-Party Risk Management – Strengthening due diligence, contractual obligations, and resilience testing will reduce external vulnerabilities.
- Investment in Modern Infrastructure – Upgrading legacy IT systems and leveraging automation can improve transparency and adaptability.
The Time to Act Is Now
The Heathrow power outage serves as a powerful metaphor for financial firms: disruptions will happen, but how institutions prepare will define their resilience.
With SS1/21 and DORA compliance deadline in 2025, firms that proactively strengthen their resilience posture will not only avoid regulatory penalties but also enhance trust, stability, and long-term competitiveness.
