Featured Product

    HKMA Sets Out Guidance on Adoption of Cloud Computing

    August 31, 2022

    The Hong Kong Monetary Authority (HKMA) has set out guidance for authorized institutions on supervisory expectations with respect to the adoption of cloud computing.

    Given the increasing trend of the adoption of cloud computing and the risks it presents, HKMA considers it appropriate to set out its supervisory expectations on this area in a holistic manner. The supervisory expectations on cloud computing, as outlined below, have been developed with reference to the results of a round of on-site examinations by HKMA between 2021 and 2022: 

    • Governance framework. Institutions should put in place an effective governance framework, overseen by the Board of Directors and senior management, for cloud computing to enable them to formulate a cloud strategy suitable for their circumstances and have it updated from time to time. A proper due diligence process should be established to assess the capabilities and suitability of a cloud service provider before the engagement and regularly during the engagement.
    • Ongoing risk management and controls. Institutions should clearly understand their roles and responsibilities under the agreement with the cloud service provider and put in place corresponding controls to ensure the effective discharge of their responsibilities. A comprehensive set of risk management procedures should be developed to enable the institution to continually identify, monitor, and mitigate the risks posed by cloud computing. Also, effective controls should be established to ensure the security of the information assets and their compliance with relevant statutory requirements regarding customer data confidentiality. A viable and effective contingency plan should be developed to cope with situations involving a disruption of cloud computing services.
    • Protection of access and other legal rights. There should be suitable arrangements to guarantee audit rights of institutions, along with the supervisory access to information stored in the cloud and relevant risk management controls for the purposes of undertaking on-site examinations. A clear and enforceable cloud service provider engagement agreement should be in place to protect institutions’ interests, risk management needs, and ability to comply with supervisory expectations.
    • Risk management capabilities. Institutions should equip staff overseeing cloud operations with the knowledge and skills required to securely use and manage the risks associated with cloud computing. 

    Authorized institutions should apply this guidance proportionately and in a way that is commensurate with the criticality of their cloud adoption and the potential impact that cloud computing may have on their risk profile. Institutions should note that the below principles serve to complement, and should be read in conjunction with, the relevant existing HKMA guidance, including SPM Modules SA-2 on “Outsourcing,” OR-2 on “Operational Resilience,” and TMG-1 on “General Principles for Technology Risk Management.”



    Keywords: Asia Pacific, Hong Kong, Banking, Regtech, Cloud Computing, Operational Resilience, Operational Risk, Basel, Outsourcing Risk, HKMA

    Featured Experts
    Related Articles

    BIS and Central Banks Experiment with GenAI to Assess Climate Risks

    A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe

    March 20, 2024 WebPage Regulatory News

    Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures

    Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.

    March 18, 2024 WebPage Regulatory News

    Singapore to Mandate Climate Disclosures from FY2025

    Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies

    March 18, 2024 WebPage Regulatory News

    SEC Finalizes Climate-Related Disclosures Rule

    The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.

    March 07, 2024 WebPage Regulatory News

    EBA Proposes Standards Related to Standardized Credit Risk Approach

    The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU

    March 05, 2024 WebPage Regulatory News

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8957