COVID-19 and the Operational Resilience of Hong Kong’s Financial Services Industry

The COVID-19 pandemic is a disruptive event that has substantially affected financial institutions worldwide since 2020. With operational resilience a key and pressing priority to achieve, financial institutions across the globe have strived to overcome managerial and technological challenges, while regulators introduced a range of policy measures and provided supervisory guidance supporting financial institutions during the pandemic in 2020-2021. This report, after reviewing how financial institutions in international markets maintained operational resilience during the pandemic in 2020-2021, discusses a framework proposing ways to enhance operational resilience during disruptive events. It also explores the views of financial institutions in Hong Kong based on a survey and interviews commissioned by the Hong Kong Institute for Monetary and Financial Research (HKIMR) in July 2021, highlighting the measures implemented across sectors of the financial services industry to mitigate the impact of the pandemic. The report then investigates how policy support, a robust financial and data infrastructure and the accelerated adoption of financial innovations have contributed to the operational resilience of financial institutions. With the COVID-19 pandemic still ongoing, the future circumstances that financial institutions will face are unclear. However, the experience gained in 2020- 2021 clearly suggests that operational resilience must be a compass for financial institutions that, with the help and guidance of financial regulators, will lead to smooth operations and ensure further growth and developments even during disruptive events.