ESAs Publish Advice on Cybersecurity and Management of ICT Risk
ESAs published two pieces of Joint Advice in response to the requests of EC in its March 2018 FinTech Action Plan. One Joint Advice pertains to the need for legislative improvements related to Information and Communication Technology (ICT) risk management requirements in the EU financial sector. The second Joint Advice pertains to the costs and benefits of a coherent cyber resilience testing framework for significant market participants and infrastructures within the EU financial sector.
Regarding the need for legislative improvements, in developing the Joint Advice, ESAs' objective was that every relevant entity should be subject to clear general requirements on governance of ICT, including cybersecurity, to ensure the safe provision of regulated services. Guided by this objective, the proposals presented in the Advice aim to promote stronger operational resilience and harmonization in the EU financial sector by applying changes to their respective sectoral legislation. Incident reporting is highly relevant to ICT risk management and allows relevant entities and authorities to log, monitor, analyze, and respond to ICT operational, ICT security, and fraud incidents. Therefore, ESAs call for streamlining aspects of the incident reporting frameworks across the financial sector. Furthermore, ESAs suggest that a legislative solution for an appropriate oversight framework to monitor the activities of critical third-party service providers should be considered.
Regarding the costs and benefits of a coherent cyber resilience testing framework, ESAs see clear benefits of such a framework. However, there are significant differences on the maturity level of cybersecurity, across and within financial sectors. In the short-term, ESAs advise to focus on achieving a minimum level of cyber-resilience across the sectors, proportionate to the needs and characteristics of the relevant entities. Furthermore, ESAs propose to establish, on a voluntary basis, an EU-wide coherent testing framework, with other relevant authorities (taking into account the existing initiatives) and with a focus on Threat Lead Penetration Testing. In the long-term, ESAs aim to ensure a sufficient cyber maturity level of identified cross-sector entities.
To implement the proposed actions, ESAs highlight the required legal basis and explicit mandate, which is necessary for development and implementation of a coherent resilience testing framework across all financial sectors by ESAs in cooperation with other relevant authorities. EC, in the March 2018 FinTech Action Plan, had specifically requested ESAs to map, by the first quarter of 2019, the existing supervisory practices across financial sectors around ICT security and governance requirements and, where appropriate, to consider issuing guidelines aimed at supervisory convergence and enforcement of ICT risk management and mitigation requirements in the EU financial sector and, if necessary, to provide EC with technical advice on the need for legislative improvements. EC had also requested ESAs to evaluate, by the fourth quarter of 2018 (now Q1 2019), the costs and benefits of developing a coherent cyber resilience testing framework for significant market participants and infrastructures within the EU financial sector.
Related Links
- Press Release
- Advice on Coherent Cyber Resilience Testing Framework (PDF)
- Advice on ICT Legislative Improvements (PDF)
- FinTech Action Plan, March 2018
Keywords: Europe, EU, Banking, Insurance, Securities, Fintech, Cyber Risk, ICT Risk, Operational Risk, Fintech Action Plan, Cyber Resilience, ESAs
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Dieter Van der Stock
IFRS subject matter expert; accounting authority; risk management specialist
Previous Article
EC Amends OTC Derivative Rules in Preparation for No-Deal BrexitRelated Articles
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
SRB Chair Outlines Work Priorities for 2021
The SRB Chair Elke König published an article setting out work priorities for 2021.
FDIC Selects Companies to Compete in Final Phase of Tech Sprint
FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.