News reaction: Silicon Valley Bank: Resilience in the face of failure
With the failure of Silicon Valley Bank (SVB) last week there are many questions now being asked. What caused the bank to collapse? Could it have been prevented? What could the bank itself and indeed its 40,000 customers - mostly in tech – done differently to mitigate risk and minimise impact.
Given SVB’s involvement in funding many fledgling tech start-ups and scale-ups, here we look into what the Bank’s failure could have spelled for the viability of these businesses, and indeed the customers they supply into.
John Boruvka, VP Sales North America, Software Resilience at NCC Group comments:
“This is the most significant bank failure since the crash of 2008 plus, in recent years we've undergone some of the biggest economic shocks in history; a pandemic, war, and a looming global recession.
All these risks combine to put significant downward financial pressure on supply chains. Given these risks, and the fact that no organisation is too big to fail, having risk mitigation and business continuity strategies that would work when tested is critical. Adding in regulation to force better preparedness for situations such as these is also needed.
The fall-out of SVB's failure is not limited to banking alone - the Bank heavily invested in tech start-ups and scale-ups. Many of these companies are involved in the development of software, for example, that businesses, other tech companies and consumers alike rely upon, day in, day out.
Technology supply chains can often be complex and varied – as much reliance can be placed on global software suppliers as niche, smaller operators, so understanding how to future proof any dependence and building resilience into the software supply chain is key to building long term success for software vendors and customers and protecting the fragility of the global tech ecosystem.
Both end users and software vendors must take ownership of their resilience, and check for risks within their supply chain and wider network to ensure business continuity. If a supplier disappears overnight, taking its valuable source code, IP or data with it, could an organisation function the next morning? If a financial institution that a software vendor relies on gets into trouble, what’s the plan for the software vendor’s ongoing viability and its commitment to its customers?
The development of business continuity and incident management plans that outline how you can respond to and recover from an event that disrupts the ongoing provision of critical functions and services is key.
There are some simple steps to take.
Review your material supplier lists - confirm if said suppliers have a stressed exit plan in place, in the case of their own failure. Add supplier failure to existing scenario tests - even use the unfolding of the collapse of SVB as a test case to see how things would play out.
SVB truly underscores the importance of resilience in every element of your supply chain and tech stack, to ensure business continuity.