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IT Risks and Compliance: A Guide for Regulated Firms

Overview

A recent guidance document from [Central Bank] highlights the importance of IT risk management for regulated firms. The document outlines key requirements for firms to ensure effective management of IT risks and maintain compliance with regulatory requirements.

Identified IT Risks

• Firms are required to develop and maintain an up-to-date list of identified IT risks that could have a significant adverse effect on their ability to provide adequate services to customers, reputation or financial condition.
  • Examples of such risks include:
    • Cybersecurity events
    • Data breaches
    • System failures
    • Other IT-related incidents

Disaster Recovery and Business Continuity Planning

• Firms are expected to have documented disaster recovery and business continuity plans in place, including:
  • A backup strategy for critical data
  • Regular testing of restore capabilities
  • Consideration of a range of plausible event scenarios, including cybersecurity events

IT Change Management

• Firms must have adequate systems in place to manage IT system changes, upgrades, and replacements, including:
  • Approval requirements
  • Clear documentation of project plans
  • Regular updates on the progress of significant IT projects provided to the Board

Cybersecurity

• The guidance emphasizes the importance of cybersecurity risk management, including:
  • Identification, prevention, detection, and response to security incidents
  • A documented strategy to address cyber risk, reviewed and approved at Board level
  • Training programs for staff on good IT security practices and common threat types are also recommended

Outsourcing of IT Systems and Services

• Firms that outsource IT services to external providers must ensure a framework is in place with:
  • Clear lines of responsibility for ongoing management, operational oversight, risk management, and review of the service provider
  • A Service Level Agreement detailing robust provisions on security, service availability, performance metrics, and penalties

Notifiable Incidents

• Firms are required to notify the Central Bank in circumstances where an IT incident has a significant adverse effect on their ability to provide adequate services to customers, reputation or financial condition.

Conclusion

The guidance emphasizes the importance of effective IT risk management for regulated firms. Failure to comply with these requirements may result in regulatory action and reputational damage. Regulated firms are advised to review their IT risk management practices and ensure compliance with the guidance.

Contact Us

For further information on any of the issues discussed in this briefing note, please contact:

• Breeda Cunningham
• Michele Barker
• Your usual contact at Dillon Eustace

About Dillon Eustace

September 2016