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Hong Kong Regulators Ramp Up Operational Resilience Requirements for Financial Institutions

HONG KONG, August 2022 - The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have issued new guidance to enhance operational resilience in the financial sector. The emphasis is on robust governance frameworks, effective risk management, and cybersecurity measures.

New Guidance

The SFC reminded intermediaries of the expected standards published in its October 2021 circular, which include:

Having an effective governance framework in place
Identifying and responding to disruptions
Managing third-party dependencies
Having an effective business continuity plan in place

The HKMA also issued a new supervisory policy manual (SPM) on operational resilience, outlining the general principles that authorized institutions should consider when developing their operational resilience frameworks.

Importance of Operational Resilience

Industry experts note that the new guidance is a response to the COVID-19 pandemic, which has highlighted the need for more robust management of operational risks within the financial sector. “The pandemic has accelerated the need for financial institutions to prioritize operational resilience,” said Lena Ng, Partner at Clifford Chance. “By implementing these measures, FIs can mitigate their operational risks and ensure business continuity.”

Cybersecurity Reforms

In related news, the cybercrime sub-committee of the law reform commission has launched a consultation on enhancing cybersecurity laws in Hong Kong. The proposed reforms aim to address the challenges of protecting individuals’ rights in the face of rapid technological advancements.

Contact: Lena Ng, Partner at Clifford Chance Phone: (852) 2825 8859

Note: This article is for general information purposes only and does not constitute legal or other professional advice.