EBA published the final guidelines on the mitigation and management of information and communication technology (ICT) and security risks for banks in EU. The guidelines set out expectations on the way in which all financial institutions should manage their internal and external ICT and security risks. The guidelines provide financial institutions with a better understanding of supervisory expectations for the management of these risks, covering sound internal governance, information security requirements, ICT operations, project and change management, and business continuity management. The guidelines, which apply to credit institutions, investment firms, and payment service providers, enter into force on June 30, 2020.
These guidelines respond to the EC's FinTech Action plan request for EBA to develop guidelines on ICT risk management and mitigation requirements in the financial sector in EU. The guidelines:
- Focus on the management and mitigation of ICT and security risks by establishing sound internal governance and an internal control framework that sets clear responsibilities for the staff of financial institutions, including for the management bodies
- Require financial institutions to maintain up-to-date inventories of their business functions, supporting processes and information assets and to classify them in terms of criticality, based on the confidentiality, integrity, and availability of data
- Remind financial institutions to ensure the effectiveness of the risk-mitigating measures, as defined by their risk management framework, when outsourcing or using third-party providers
- Specify high-level principles on how ICT operations should be managed, including requirements to improve, when possible, the efficiency of ICT operations; implement logging and monitoring procedures for critical ICT operations; maintain an up-to-date inventory of their ICT assets; monitor and manage the life cycle of ICT assets; and implement backup plans and recovery procedures
- Specify expectations on business continuity management and developing response and recovery plans, including testing, and their consequent updating based on the test results
- Cover the management of relationship of payment service providers with payment service users to ensure that users are made aware of the security risks linked to the payment services and are provided with the tools to disable specific payment functionalities and monitor payment transactions
In implementing these guidelines, financial institutions should refer to the existing standards and leading best practices. These guidelines intend to be technology and methodology agnostic. The implementation of these guidelines should be done in accordance with the principle of proportionality, taking into account the scale and complexity of operations, the nature of the activity engaged in, the types of services provided, and the corresponding ICT and security risks related to the processes and services of financial institutions. These guidelines complement, and should be read in conjunction with, the supervisory assessment to the applicable institutions in EBA guidelines on ICT risk assessment under the Supervisory Review and Evaluation Process (EBA/GL/2017/05) and other relevant guidelines such as EBA guidelines on outsourcing arrangements (EBA/GL/2019/02).
Effective Date: June 30, 2020
Keywords: Europe, EU, Banking, CRD, PSD 2, ICT Risk, Cyber Risk, Proportionality, Operational Risk, Outsourcing Arrangements, Third-Party Arrangements, Fintech, EBA
Previous ArticleIFRS Announces Appointments to IFRS Advisory Council from 2020
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).
US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.