SAMA Publishes Financial Entities Ethical Red Teaming Framework

By Regulatory News

June 07, 2019

SAMA published the Financial Entities Ethical Red Teaming Framework, in an effort to address the increasing cyber risks. The framework is intended as a guide to prepare and execute controlled cyber attacks against the production environment, without exposing sensitive information, with the help of certified and experienced Red Teaming Providers. The framework aims to share intelligence and information obtained during testing to further improve cyber resilience in the financial sector in Saudi Arabia. The framework applies to all member organizations in the financial sector regulated by SAMA.

The information to be provided by a third party seeking authorization to assess the compliance of securitizations with the STS criteria provided for in Securitization Regulation should enable a competent authority to evaluate whether and, to what extent, the applicant meets the conditions of Article 28(1) of the Securitization Regulation. An authorized third party will be able to provide STS assessment services across EU. The application for authorization should, therefore, comprehensively identify that third party, any group to which this third party belongs, and the scope of its activities. With regard to the STS assessment services to be provided, the application should include the envisaged scope of the services to be provided as well as their geographical scope, particularly the following:

To facilitate effective use of the authorization resources of a competent authority, each application for authorization should include a table clearly identifying each submitted document and its relevance to the conditions that must be met for authorization.
To enable the competent authority to assess whether the fees charged by the third party are non-discriminatory and are sufficient and appropriate to cover the costs for the provision of the STS assessment services, as required by Article 28(1)(a) of Securitization Regulation, the third party should provide comprehensive information on pricing policies, pricing criteria, fee structures, and fee schedules.
To enable the competent authority to assess whether the third party is able to ensure the integrity and independence of the STS assessment process, that third party should provide information on the structure of those internal controls. Furthermore, the third party should provide comprehensive information on the composition of the management body and on the qualifications and repute of each of its members.
To enable the competent authority to assess whether the third party has sufficient operational safeguards and internal processes to assess STS compliance, the third party should provide information on its procedures relating to the required qualification of its staff. The third party should also demonstrate that its STS assessment methodology is sensitive to the type of securitization and that specifies separate procedures and safeguards for asset-backed commercial paper (ABCP) transactions/programs and non-ABCP securitizations.

The use of outsourcing arrangements and a reliance on the use of external experts can raise concerns about the robustness of operational safeguards and internal processes. The application should, therefore, contain specific information about the nature and scope of any such outsourcing arrangements or use of external experts as well as the third party's governance over those arrangements. Regulation (EU) 2019/885 is based on the draft regulatory technical standards submitted by ESMA to EC.

Related Links

Effective Date: June 18, 2019

Press Release

Proposed Rule 1

Proposed Rule 2

Proposed Rule 3

Presentation on Regulatory Framework (PDF)

Presentation on Resolution Plan Rules (PDF)

The principal objective of the framework is to provide guidance on how to conduct the red teaming activities and how to test the detection and response capabilities of a member organization against real sophisticated and advanced attacks and enhance the knowledge of the involved stakeholders. The framework consists of four phases—preparation phase, scenario phase, execution phase, and lessons learned phase. Red Teaming should not be regarded as an audit but as a simulation test that seeks to provide insight into the level of resilience and effectiveness of the implemented cyber-security controls and relevant processes. Red Teaming is not a penetration test; rather, in contrast to a penetration test (in which one or more specific information assets are tested and assessed), it focuses on replicating a targeted and realistic attack against the entire member organization and is performed in a controlled manner.

SAMA has the authority to select any member organization to perform a red teaming exercise considering its criticality and the emerging threat landscape. In addition, a member organization can rightfully conduct red teaming exercise to ensure security resilience. However, as a minimum, domestic systemically important entities will be subject to testing once every three years, in line with this framework. SAMA will maintain the framework and conduct periodic reviews to determine its effectiveness, including the extent to which it addresses the emerging cyber-security threats and risks. If applicable, SAMA will update the framework based on the outcome of the review and lessons learned.

Related Links

Keywords: Middle East and Africa, Saudi Arabia, Banking, Red Teaming Framework, Cyber Risk, Cyber Testing, Operational Risk, Cyber Resilience, SAMA

ISDA Publishes Master Regulatory Disclosure Letter and Guidance Note

EIOPA Re-Consults on New Amendments to Standards on Mapping of ECAIs

News

EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

July 10, 2020 WebPage Regulatory News

News

FASB Proposes to Delay Implementation of Insurance Contracts Standard

FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).