BCBS published a report that identifies, describes, and compares the range of observed bank, regulatory, and supervisory cyber-resilience practices across jurisdictions. The challenges and initiatives to enhance cyber-resilience have been summarized in the form of 10 key findings and illustrated by case studies that focus on concrete developments in the jurisdictions covered. BCBS classifies the expectations and practices into four broad dimensions of cyber-resilience: governance and culture; risk measurement and assessment of preparedness; communication and information-sharing; and interconnections with third parties.
The following are some of the key findings of the study:
- While regulators generally do not require a specific cyber strategy, all expect institutions to maintain adequate capability in this area as part of their global strategies. In most jurisdictions, broader IT and operational risk management practices are quite mature and are used to address cyber-risk and supervise cyber-resilience.
- Although management models such as the three lines of defence (3LD) model are widely adopted, cyber-resilience is not always clearly articulated across the technical, business, and strategic lines. This confusion in roles and responsibilities hampers the effectiveness of the 3LD model.
- Although some forward-looking indicators of cyber-resilience are being picked up through the most widespread supervisory practices, no standard set of metrics has emerged yet. This makes it more difficult for supervisors and banks to articulate and engage on cyber-resilience.
- Most observed information-sharing mechanisms involve bank-to-bank and bank-to-regulator communications, with the former being mostly done on a voluntary basis.
- Regulatory frameworks for outsourcing activities across jurisdictions are quite established and share substantial commonalities. However, there is no common approach regarding third parties beyond outsourced services, which implies different scopes of regulation and supervisory actions. While third parties may provide cost-effective solutions to increase resilience levels, the onus remains on the banks to demonstrate adequate understanding and active management of the third-party dependencies and concentration across the value chain
In preparing this range of practices document, BCBS relied on input from its member jurisdictions in response to a survey conducted by FSB in April 2017. By describing the diversity of approaches thematically, the report will help banks and supervisors navigate the regulatory environment and will serve as a useful input for identifying areas where further policy work by the Basel Committee may be warranted. Going forward, the Committee will integrate the cyber dimension into its broader operational resilience work.
Keywords: International, Banking, Regtech, Suptech, Cyber Resilience, Operational Risk, Cyber Risk, BCBS