Featured Product

    ECB Issues Opinion on Proposed Rule on Digital Operational Resilience

    June 04, 2021

    ECB published an opinion on the proposal for a regulation on digital operational resilience for the financial sector. The opinion has been published in response to requests from the European Council and Parliament. In the opinion, ECB welcomes the proposed regulation, which is intended to enhance cyber security and operational resilience of the financial sector in EU. ECB welcomes the aim of the proposed regulation to remove obstacles to, and improve the establishment and functioning of, the internal market for financial services by harmonizing the rules applicable in the area of information and communication technology (ICT) risk management, reporting, testing, and ICT third-party risk.

    ECB welcomes the aim of the proposed regulation to streamline and harmonize any overlapping regulatory requirements or supervisory expectations to which financial entities are currently subject under the EU law. ECB understands that the proposed regulation intends to set forth a prudential internal governance framework for the management of ICT risk, which will be integrated into the general internal governance framework under the Capital Requirements Directive. Moreover, given the prudential nature of the proposed framework, the competent authorities responsible for supervision of compliance with the obligations set out under the proposed framework, including ECB, will be the authorities responsible for banking supervision, in accordance with the Single Supervisory Mechanism (SSM) Regulation. 

    ECB supports the effort of the EU legislative bodies to promote harmonization and streamline the set of rules and obligations applicable to credit institutions on incident reporting. In view of this, ECB stands ready to amend (and potentially repeal) the Incident Reporting Framework, where necessary, in the light of the eventual adoption of the proposed regulation. In its opinion, ECB sets out the following specific observations on ICT risk management, incident reporting, operational resilience testing, and ICT third-party risk:

    • ECB welcomes the introduction by the proposed regulation of a robust and comprehensive ICT risk management framework that encompasses the CPMI-IOSCO guidance on cyber resilience and is closely aligned to best practices, including the Eurosystem Cyber Resilience Oversight Expectations for financial market infrastructures. In relation to the identification and classification to be performed by financial entities under the proposed regulation, ECB would consider it prudent, for the purposes of the classification of assets, that the proposed regulation also require financial entities to consider the criticality of such assets (that is whether they support critical functions).
    • ECB welcomes the efforts outlined in the proposed regulation to harmonize the ICT incident reporting landscape in EU and work toward a centralized reporting of major ICT-related incidents. ECB emphasizes that the responsibility for, and ownership of, the remediation and the consequences of an incident should remain solely and clearly with the concerned financial entity. ECB would, therefore, propose to limit the feedback and guidance to high-level prudential feedback and guidance only.
    • ECB welcomes the requirements set out under the proposed regulation on digital operational resilience testing across financial entities and the need for each institution to have its own testing program. ECB proposes to remove, from the proposed regulation, any obligation for competent authorities regarding the validation of documents and the issuance of an attestation for a threat-led penetration testing.
    • ECB welcomes the introduction of a comprehensive set of key principles and a robust oversight framework to identify and manage ICT risks stemming from ICT third-party service providers, regardless of whether these belong to the same group of financial entities. Having said that, to achieve an effective ICT risk identification and management, it is important to correctly identify and classify the critical ICT third-party service providers. In this regard, while the introduction of delegated acts that will supplement the criteria to be used for classification purposes is welcome, ECB should be consulted prior to the adoption of such delegated acts.

     

    Related Link: Opinion (PDF)

     

    Keywords: Europe, EU, Banking, Operational Resilience, ICT Risk, Incident Reporting, Operational Risk, Third-Party Risk, SSM, CRD, Basel, Cyber Resilience, Cybersecurity, Fintech, Opinion, ECB

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582