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.
Keywords: Asia Pacific, Australia, Banking, Fintech, Cloud Computing, Guidance, APRA
Previous ArticleEBA Launches the 2018 Data Transparency Exercise for EU
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.
FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).
HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.