Financial entity resilience describes an institution’s capacity to absorb shocks and recover effectively from adverse events without significant disruption to its operations. This attribute pertains to a financial organization’s ability to maintain continuity of critical functions during and after severe disturbances, such as economic crises, market volatility, or cyber incidents. It encompasses robust risk management frameworks, sufficient capital buffers, and adaptable operational processes. The objective is to safeguard financial stability and protect consumers from systemic failures.
Context
In the rapidly evolving digital asset market, financial entity resilience is a growing concern for regulators and market participants alike, particularly concerning cryptocurrency exchanges, stablecoin issuers, and decentralized finance protocols. News reports often assess the stability of these entities in response to market corrections or security breaches, emphasizing the need for robust stress testing and contingency planning. Ensuring resilience is vital for building trust and achieving mainstream adoption of digital financial services.
CASPs must immediately integrate DORA's systemic ICT risk management and third-party oversight framework into their core compliance architecture by the January 2025 deadline.
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