Britain’s financial regulator, the Financial Conduct Authority (FCA) has advised institutions to better prepare themselves for disruptive IT meltdowns by strengthening their defences.
The warning follows the major Crowdstrike outage earlier in 2024, which affected 8.5 million Windows machines worldwide, and the FCA wants to make sure future incidents don’t bring the banking industry to a standstill.
The banking sector was hit hard by the outage, losing an estimated $1.15 billion in damages, second only to the healthcare sector which took a hit of around $1.94 billion.
Lessons learnt
Now, the FCA is urging firms to become ‘operationally resilient’ in line with their rules to prevent further losses.
The risk of more incidents is ‘severe but plausible’, the FCA warned, but even then businesses will need to continue to deliver crucial services.
This nudge from the FCA comes before a hard deadline, as in March 2025, it is introducing operational resilience requirements for the financial sector. These rules are aimed at mitigating the impact and limiting instability from any disruption, protecting consumers and market integrity.
There’s a dependence on unregulated third parties to deliver business services, says the FCA. This has put industries at risk, with just one update having the potential to cripple services around the world.
"These outages emphasise firms' increasing dependence on unregulated third parties to deliver important business services," the FCA said in a statement.
"We encourage all firms, regardless of how they were affected by the CrowdStrike incident, to consider these lessons, to improve their ability to respond to and recover from future disruptions." the regulator continued.
After the Crowdstrike incident, the FCA says the organisations that recovered quickest were those whose testing procedures were up to standard by prioritising which systems to bring online first, and minimising the impact across the board.
Via The Register
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