APRA Updates Guidance on Cloud Computing Services
APRA released updated guidance, in the form of an Information Paper, on the use of shared computing services, such as cloud, by APRA-regulated entities. The new paper acknowledges that advancements in cloud computing service offerings over the past three years have improved the ability of APRA-regulated entities to manage the risks involved. However, it also emphasizes the need for entities to be mindful of the differing levels of responsibility for operating and managing these arrangements.
This Information Paper is relevant for a broad audience including boards, senior management, risk management, technical specialists, and internal audit. APRA has a number of existing prudential standards and practice guides that are pertinent to cloud computing services. These Prudential Standards and Prudential Practice Guides include CPS 231 Outsourcing; SPS 231 Outsourcing; HPS231 Outsourcing; PPG 231 Outsourcing; SPG 231 Outsourcing; CPS 232 Business Continuity Management; SPS 232 Business Continuity Management; CPG 233 Pandemic Planning; (draft) CPS 234 Information Security, CPG 234 Management of Security Risk in Information and Information Technology; and CPG 235 Managing Data Risk. This Information Paper applies the concepts included in these standards and guides and APRA intends to reflect the principles in this paper in future guidance updates. For the purpose of this paper, APRA has classified these risks into three broad categories: low, heightened, and extreme.
- For arrangements with low inherent risk not involving offshoring, APRA would not expect an APRA-regulated entity to consult with APRA prior to entering into the arrangement.
- For arrangements with heightened risk, APRA would expect to be consulted after the APRA-regulated entity’s internal governance process is completed.
- For arrangements involving extreme inherent risk, APRA encourages earlier engagement as these arrangements will be subjected to a higher level of scrutiny.
The new Information Paper updates information on prudential considerations and key principles issued to APRA-regulated entities in July 2015. It has been developed in response to the growing use of the cloud by APRA-regulated entities for higher inherent risk activities and in response to the observed areas of weakness in how entities approach and manage these risks. APRA-regulated entities should note that while this information paper does not constitute formal regulation, APRA intends to incorporate the better practices described in the paper into prudential standards and practice guides in the future. Any such changes will be subject to APRA’s normal processes of consultation.
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Keywords: Asia Pacific, Australia, Banking, Fintech, Cloud Computing, Guidance, APRA
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