What Is CPS 234 and Who Needs to Comply With It?
CPS 234 is an Australian regulation by the Australian Prudential Regulation Authority (APRA) since July 1, 2019, to strengthen the resilience of APRA-regulated entities (banks, insurance, superannuation funds) against cyber threats. It mandates these entities to implement cyberattack protection measures.
What Is CPS 234 Compliance?
CPS 234 compliance refers to the regulatory requirements set by the Australian Prudential Regulation Authority (APRA) for information security management in financial institutions. The CPS 234 standard aims to improve the resilience of APRA-regulated entities against cyber threats and promote the stability of the financial system.
Why Is CPS 234 Compliance Important?
The financial sector has increasingly become a target of cybercrime, making CPS 234 compliance essential in the prevention and mitigation of cyber threats. The CPS 234 framework is designed to ensure that APRA-regulated entities maintain a robust and efficient information security and resilience capability, protecting themselves and their customers from cyber risks.
Who Needs to Comply With CPS 234?
CPS 234 applies to all APRA-regulated entities, including authorized deposit-taking institutions (ADIs) such as banks, general insurers, life insurers, and superannuation funds. Therefore, any financial institution that is operating in Australia and is required to be licensed or registered with APRA needs to comply with CPS 234.
The Role of APRA in Maintaining CPS 234 Compliance
The Australian Prudential Regulation Authority (APRA) plays a vital role in maintaining CPS 234 compliance. As the regulatory body tasked with supervising and regulating financial institutions in Australia, APRA is responsible for ensuring that these institutions comply with the requirements of CPS 234.
Some of the key roles of APRA in maintaining CPS 234 compliance include:
Set and Enforce Standards
APRA sets the standards for cybersecurity and information security for financial institutions that come under its regulatory purview. The authority also monitors and enforces compliance with these standards, including the requirements of CPS 234.
Conduct Audits and Assessments
APRA conducts regular audits and assessments of financial institutions to evaluate their compliance with the cybersecurity standards and requirements of CPS 234. These assessments help identify any areas of noncompliance, which are then addressed through remedial action plans.
Provide Guidance and Support
APRA provides guidance and support to financial institutions to help them understand the requirements of CPS 234 and implement the necessary measures to comply with them. This includes providing information on best practices, risk management strategies, and other relevant cybersecurity-related topics.
Promote Awareness and Education
APRA also plays a critical role in promoting awareness and education around cybersecurity and information security risk management across the financial industry. This includes collaborating with other regulatory bodies and industry associations to share knowledge and best practices in this area.
Implications of Noncompliance With CPS 234 Framework
The consequences of noncompliance with CPS 234 requirements can be significant for an organization. The following are just some of the consequences of noncompliance with CPS 234:
Fines and Penalties Can Significantly Impact Financial Condition
The Australian Prudential Regulation Authority has the authority to impose hefty fines and penalties for noncompliance with CPS 234. These fines can be up to $210 million or 10% of the company’s turnover.
Reputational Damage Can Destroy Customer Loyalty
Noncompliance with CPS 234 can lead to reputational damage for the organization. This can cause a loss of customer trust and potentially lead to a decline in business.
Legal Action Can Drag on for Years and Cost Millions
Noncompliance can also result in legal action from customers, regulators, or other third parties. This can lead to legal expenses and reputational damage.
Loss of License Can Destroy Your Business
In extreme cases, noncompliance with CPS 234 can lead to the revocation of an organization’s license to operate in Australia.
The Requirements of CPS 234
The CPS 234 standard includes eight requirements that APRA-regulated entities must satisfy to comply with the framework. These requirements relate to information security management, incident management, vulnerability management, identity and access management, data loss prevention, cyber resilience testing, supplier risk management, and collaboration with other entities.
APRA-regulated entities must establish processes and procedures to manage cyber risks effectively, including maintaining an effective Information Security Management System (ISMS) and implementing measures to secure their systems, data, and assets.
CPS 234 and Information Security Management Systems (ISMS)
An ISMS is a framework designed to manage and protect sensitive information through a system of policies, procedures, and controls. For CPS 234 compliance, APRA-regulated entities must develop and implement a robust ISMS that identifies risks, implements controls, and provides continuous monitoring and improvement.
The Importance of System Vulnerability Management for CPS 234 Compliance
System vulnerability management involves identifying, assessing, and managing vulnerabilities in the system. APRA-regulated entities must establish processes for identifying and managing system vulnerabilities, including implementing timely patches and updates, and conducting regular vulnerability assessments.
The Role of Identity and Access Management (IAM) in CPS 234 Compliance
Identity and access management (IAM) involves managing user identities, access levels, and permissions to prevent unauthorized access to sensitive information. APRA-regulated entities must implement effective IAM controls, including multi-factor authentication, access reviews, and least-privilege access.
Data Loss Prevention (DLP) for CPS 234 Compliance
Data loss prevention (DLP) measures protect sensitive information from loss, misuse, or unauthorized disclosure. APRA-regulated entities must implement DLP controls to prevent unauthorized access to sensitive information and ensure that it is properly protected.
The Criticality of Incident Management in CPS 234 Compliance
Incident management involves identifying, analyzing, and responding to security incidents. APRA-regulated entities must establish processes for managing incidents, including reporting, escalation, investigation, and resolution.
Cyber Resilience Testing for CPS 234 Compliance
Cyber resilience testing involves testing the effectiveness of an entity’s cyber resilience capability in the event of a cyberattack or disruption. APRA-regulated entities must conduct regular cyber resilience tests to ensure their systems and processes are effective and resilient against cyber threats.
Implementing CPS 234 Compliance
Before implementing CPS 234 compliance, APRA-regulated entities must identify key stakeholders, allocate resources, and establish a clear plan for implementation. There are other considerations, too. The following list provides a brief overview of steps organizations must take or at least consider when planning for CPS 234 compliance:
Determine the Scope of Your ISMS
The scope of the ISMS should cover all critical assets, systems, and data within the entity’s control. APRA-regulated entities must ensure their ISMS scope aligns with their business objectives, risk management strategies, and regulatory requirements.
Design Your ISMS
The ISMS should be designed to ensure maximum protection for sensitive information and systems. APRA-regulated entities must develop and implement appropriate policies, procedures, and controls that address risks identified in the risk assessment process.
Choose the Right Identity and Access Management (IAM) Solution
Selecting the right identity and access management solution is critical to ensuring effective access management. APRA-regulated entities must consider key factors such as ease of use, scalability, and integration with existing systems when selecting an IAM solution.
Select an Appropriate DLP Solution
DLP solutions are essential in protecting sensitive information from unauthorized access, loss, or misuse. APRA-regulated entities must select appropriate DLP solutions that align with their IT infrastructure, data types, and compliance requirements.
Identify Vulnerabilities in Your Systems
APRA-regulated entities must identify and assess system vulnerabilities regularly, including conducting regular vulnerability scans and penetration testing. They should prioritize vulnerabilities based on potential impact and likelihood of exploitation.
Create a Well-defined Incident Management Plan
APRA-regulated entities must develop and maintain an incident management plan that outlines procedures for detecting, reporting, analyzing, and responding to security incidents. The plan should define roles and responsibilities, escalation procedures, and communication protocols.
Conduct Cyber Resilience Testing
APRA-regulated entities must conduct regular cyber resilience tests to ensure their systems and processes are effective and resilient against cyber threats. They should use testing results to identify areas for improvement and adjust their cyber resilience strategy accordingly.
How to Maintain CPS 234 Compliance
APRA-regulated entities must continuously update their ISMS to ensure it remains effective against evolving cyber threats. They should conduct regular reviews and risk assessments, and monitor their IT environment for potential security risks.
Regularly Review System Vulnerabilities
APRA-regulated entities must conduct regular vulnerability assessments and keep their systems up to date with the latest patches and updates. They should prioritize remediation efforts based on potential impact and likelihood of exploitation.
Manage Identity and Access Effectively
APRA-regulated entities must regularly review and update their IAM policies, procedures, and controls to ensure they remain effective against evolving cyber threats. They should conduct regular access reviews, monitor access logs, and revoke access when necessary.
Ensure the Effectiveness of DLP
APRA-regulated entities must regularly review and update their DLP policies, procedures, and controls to ensure they remain effective against evolving cyber threats. They should review DLP logs regularly, monitor data flows, and adjust policies when necessary.
Maintain Your Incident Management Plan
APRA-regulated entities must regularly review and update their incident management plan to ensure it remains effective against evolving cyber threats. They should conduct regular table-top exercises and simulations to test their incident response capabilities.
Upgrade Your Cyber Resilience Testing
APRA-regulated entities must evolve their cyber resilience testing capabilities to account for emerging cyber threats adequately. They should conduct regular simulations based on latest threat intelligence and adjust their testing strategies accordingly.
Challenges to Achieving CPS 234 Compliance
Complying with CPS 234 is a critical task for financial institutions operating in Australia. However, it also presents several challenges that organizations have to overcome. From a lack of understanding to complex system infrastructures, the difficulties extend to the evolving cybersecurity threat landscape and regulatory overlap. To effectively achieve compliance and maintain data security, businesses must face these challenges with the necessary resources and expertise, while ensuring accountability across all levels of their operations.
Complexity of CPS 234 Requirements
Many organizations may not understand the requirements of the CPS 234 standard and may not have the necessary expertise to implement the appropriate security measures.
Financial and Time Constraints Required for Achieving CPS 234 Compliance
Compliance with CPS 234 requires significant investment of resources, including time, money, and personnel. This can be challenging for organizations that have limited resources.
System Integration Complexity in Adherence to CPS 234 Requirements
Many organizations have complex systems that require significant effort to secure. This can make it difficult to implement the requirements of CPS 234.
Reliance on Third Parties for Compliance With CPS 234
Many organizations rely on third-party vendors for critical systems and services. It can be challenging to ensure that these vendors also comply with CPS 234.
Rapidly Evolving Threats
Cyber threats are constantly evolving, making it challenging for APRA-regulated entities to keep up with the latest threats and vulnerabilities. Entities must continuously update their security controls and strategies to stay ahead of cyberattackers.
Conflicting Compliance Requirements and Regulations
Many organizations are subject to multiple cybersecurity regulations and standards, which can create confusion and lead to compliance challenges.
Lack of Accountability
Compliance with CPS 234 requires commitment from all levels of the organization, and it can be challenging to ensure that everyone understands their roles and responsibilities.
Benefits of CPS 234 Compliance for APRA-regulated Entities
Compliance with CPS 234 can bring a range of benefits to these entities, including improved cybersecurity, better risk management, enhanced customer trust, regulatory compliance, competitive advantage, and cost savings.
Improved Cybersecurity: Your Business Will Be Better Protected From Cyber Threats With CPS 234 Compliance
CPS 234 compliance provides APRA-regulated entities with a robust framework to develop, implement, and maintain their cybersecurity posture. This, in turn, helps to ensure that sensitive data and systems are adequately protected against cyber threats.
Better Risk Management: Your Business Will Be Better Able to Mitigate Risks and Enhance Operational Resilience Through CPS 234 Compliance
By complying with CPS 234, APRA-regulated entities can identify potential cyber risks and develop strategies to mitigate them. This helps to avoid data breaches, financial losses, reputational damage, and other negative consequences of cyberattacks.
Enhanced Customer Trust: Your Business Will Be Better Able to Ensure Data Security and Privacy for Your Customers With CPS 234 Compliance
Compliance with CPS 234 demonstrates that APRA-regulated entities are committed to protecting their customers’ data and assets. This can help to build trust and confidence among customers, investors, and other stakeholders.
Regulatory Compliance: Your Business Will Be Better Able to Meet APRA’s CPS 234 Standards
Compliance with CPS 234 is mandatory for APRA-regulated entities. Failure to comply can result in fines, legal action, and reputational damage. Compliance ensures that entities meet the regulatory requirements and standards set out by APRA.
Competitive Advantage: Your Business Will be Better Able to Differentiate Itself in a Competitive Marketplace with CPS 234 Compliance
Compliance with CPS 234 can give APRA-regulated entities a competitive advantage over their peers. By demonstrating their commitment to cybersecurity, entities can attract and retain customers who prioritize security and data protection.
Cost Savings: Your Business Will Be Better Able to Optimize its Operations and Reduce Cybersecurity-related Costs With CPS 234 Compliance
Implementing CPS 234 compliance can help entities identify and address potential vulnerabilities in their systems and processes, reducing the risk of expensive cyberattacks. This can result in cost savings for entities by avoiding the need for costly remediation efforts in the future.
Kiteworks Supports CPS 234 Compliance of the Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority (APRA) has implemented regulations to strengthen the resilience of APRA-regulated entities against cyber threats. The CPS 234 regulation mandates these entities to implement cyberattack protection measures. In order to comply with CPS 234, organizations should have clearly defined information security-related roles and responsibilities of the board, senior management, governing bodies, and individuals. Kiteworks is a comprehensive solution that directly supports an organization’s ability to comply with CPS 234 and other data privacy regulations, including the European Union’s General Data Protection Regulation (GDPR), the Information Security Registered Assessors Program (IRAP), and many more.
The Kiteworks-enabled Private Content Network provides granular controls to protect sensitive content based on roles and responsibilities. Access control can be managed within compliance with geofencing, app enablement, file type filtering, and email forwarding control. Kiteworks’ platform can be deployed on-premises or in a private cloud, hybrid, hosted, and even FedRAMP virtual private cloud. This deployment flexibility lets organizations tailor Kiteworks to their specific business and security requirements. The platform’s ability to find the perfect balance between privacy, compliance, scalability, and costs minimizes security vulnerabilities and reduces maintenance costs.
Kiteworks supports compliance by providing organizations the ability to increase control and governance over their sensitive digital assets. By unifying security for third-party communications, including email, file sharing, mobile, managed file transfer (MFT), and Secure File Transfer Protocol (SFTP), Kiteworks provides centralized governance and protection of sensitive digital assets, making it an ideal solution for organizations handling sensitive email and file data that require strict security controls to prevent unauthorized access, disclosure, or modification. Plus, Kiteworks enforces a strict secure software development life cycle and provides immutable audit logs for efficient mandatory reporting of any data violations to the APRA in a timely manner.
Schedule a custom demo of Kiteworks to see how it supports CPS 234 Compliance.
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