Impact tolerance

Risk management - regulation - supervision - UK Prudential Regulation Authority (PRA) - Financial Conduct Authority (FCA).

The maximum tolerable level of disruption to an important business service, as measured by a length of time - in addition to any other relevant metrics.

The maximum impact tolerance level reflects the point at which any further disruption to the important business service could cause intolerable harm to:

(1) any one or more of the firm’s clients, or

(2) pose a risk to the soundness, stability or resilience of the UK financial system, or

(3) the orderly operation of the financial markets.

(Source - Financial Conduct Authority Handbook.)

Setting impact tolerances - Bank of England - Financial Conduct Authority

"Firms and FMIs should identify specific metrics for the maximum tolerable level of disruption.

These should be measures that identify: harm to consumers or market participants; harm to market integrity; threat to policyholder protection; safety and soundness; or financial stability.

Such metrics could measure the extent of disruption, for example by including the maximum value of disruption, number of transactions, or the number of customers affected.

All impact tolerances should include the maximum tolerable duration of such disruption, taking into account the criticality of the important business service.

However, a metric based on time alone may be insufficient."

Building operational resilience: Impact tolerances for important business services - Bank of England - Financial Conduct Authority.

See also

• Bank of England
• Business impact analysis
• Enterprise risk management
• Financial Conduct Authority (FCA)
• Financial Market Infrastructure (FMI)
• Financial markets
• Firm
• Guide to risk management
• Impact
• Metric
• PRA Supervisory Statement 1/21 (SS1/21)
• Prudential Regulation Authority (PRA)
• Regulation
• Resilience
• Risk appetite
• Risk management
• Risk policy
• Risk tolerance
• Supervision

Other resources

• Building operational resilience: Impact tolerances for important business services - Bank of England - Financial Conduct Authority
• Financial Conduct Authority Handbook - Impact tolerance