ICT risk management framework


TL;DR The Digital Operations Resilience Act from the European Union outlines requirements for financial entities' ICT risk management frameworks. These frameworks must include strategies, policies, procedures, ICT protocols and tools that mitigate risk and protect information and ICT assets. A control function must be assigned to oversee ICT risk, preferably with an appropriate level of independence. ICT risk management frameworks must be documented and regularly reviewed, and subject to internal audit by auditors with appropriate knowledge and independence. They must also include a digital operational resilience strategy and, when applicable, a multi-vendor ICT strategy. Financial entities must also remain responsible for the verification of compliance with ICT risk management requirements, even if outsourcing the tasks.
  1. Financial entitiesas defined in Article 2, points (a) to (t) shall have a sound, comprehensive and well-documented ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework as part of their overall risk management system, which enables them to address ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment quickly, efficiently and comprehensively and to ensure a high level of digital operational resiliencethe ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions.

  2. The ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework shall include at least strategies, policies, procedures, ICT protocols and tools that are necessary to duly and adequately protect all information assetsa collection of information, either tangible or intangible, that is worth protecting and ICT assetsa software or hardware asset in the network and information systems used by the financial entity, including computer software, hardware, servers, as well as to protect all relevant physical components and infrastructures, such as premises, data centres and sensitive designated areas, to ensure that all information assetsa collection of information, either tangible or intangible, that is worth protecting and ICT assetsa software or hardware asset in the network and information systems used by the financial entity are adequately protected from risks including damage and unauthorised access or usage.

  3. In accordance with their ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework, financial entitiesas defined in Article 2, points (a) to (t) shall minimise the impact of ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment by deploying appropriate strategies, policies, procedures, ICT protocols and tools. They shall provide complete and updated information on ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment and on their ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework to the competent authoritiesas defined in Article 46 upon their request.

  4. Financial entitiesas defined in Article 2, points (a) to (t), other than microenterprisesa financial entity, other than a trading venue, a central counterparty, a trade repository or a central securities depository, which employs fewer than 10 persons and has an annual turnover and/or annual balance sheet total that does not exceed EUR 2 million, shall assign the responsibility for managing and overseeing ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment to a control function and ensure an appropriate level of independence of such control function in order to avoid conflicts of interest. Financial entitiesas defined in Article 2, points (a) to (t) shall ensure appropriate segregation and independence of ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management functions, control functions, and internal audit functions, according to the three lines of defence model, or an internal risk management and control model.

  5. The ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework shall be documented and reviewed at least once a year, or periodically in the case of microenterprisesa financial entity, other than a trading venue, a central counterparty, a trade repository or a central securities depository, which employs fewer than 10 persons and has an annual turnover and/or annual balance sheet total that does not exceed EUR 2 million, as well as upon the occurrence of major ICT-related incidentsan ICT-related incident that has a high adverse impact on the network and information systems that support critical or important functions of the financial entity, and following supervisory instructions or conclusions derived from relevant digital operational resilience testingas defined in Article 24 or audit processes. It shall be continuously improved on the basis of lessons derived from implementation and monitoring. A report on the review of the ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework shall be submitted to the competent authorityas defined in Article 46 upon its request.

  6. The ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework of financial entitiesas defined in Article 2, points (a) to (t), other than microenterprisesa financial entity, other than a trading venue, a central counterparty, a trade repository or a central securities depository, which employs fewer than 10 persons and has an annual turnover and/or annual balance sheet total that does not exceed EUR 2 million, shall be subject to internal audit by auditors on a regular basis in line with the financial entities’ audit plan. Those auditors shall possess sufficient knowledge, skills and expertise in ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment, as well as appropriate independence. The frequency and focus of ICT audits shall be commensurate to the ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment of the financial entity.

  7. Based on the conclusions from the internal audit review, financial entitiesas defined in Article 2, points (a) to (t) shall establish a formal follow-up process, including rules for the timely verification and remediation of critical ICT audit findings.

  8. The ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework shall include a digital operational resiliencethe ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions strategy setting out how the framework shall be implemented. To that end, the digital operational resiliencethe ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions strategy shall include methods to address ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment and attain specific ICT objectives, by:

    1. explaining how the ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management framework supports the financial entity’s business strategy and objectives;

    2. establishing the risk tolerance level for ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment, in accordance with the risk appetite of the financial entity, and analysing the impact tolerance for ICT disruptions;

    3. setting out clear information security objectives, including key performance indicators and key risk metrics;

    4. explaining the ICT reference architecture and any changes needed to reach specific business objectives;

    5. outlining the different mechanisms put in place to detect ICT-related incidentsa single event or a series of linked events unplanned by the financial entity that compromises the security of the network and information systems, and have an adverse impact on the availability, authenticity, integrity or confidentiality of data, or on the services provided by the financial entity, prevent their impact and provide protection from it;

    6. evidencing the current digital operational resiliencethe ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions situation on the basis of the number of major ICT-related incidentsan ICT-related incident that has a high adverse impact on the network and information systems that support critical or important functions of the financial entity reported and the effectiveness of preventive measures;

    7. implementing digital operational resilience testingas defined in Article 24, in accordance with Chapter IV of this Regulation;

    8. outlining a communication strategy in the event of ICT-related incidentsa single event or a series of linked events unplanned by the financial entity that compromises the security of the network and information systems, and have an adverse impact on the availability, authenticity, integrity or confidentiality of data, or on the services provided by the financial entity the disclosure of which is required in accordance with Article 14.

  9. Financial entitiesas defined in Article 2, points (a) to (t) may, in the context of the digital operational resiliencethe ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions strategy referred to in paragraph 8, define a holistic ICT multi-vendor strategy, at groupa group as defined in Article 2, point (11), of Directive 2013/34/EU or entity level, showing key dependencies on ICT third-party service providersan undertaking providing ICT services and explaining the rationale behind the procurement mix of ICT third-party service providersan undertaking providing ICT services.

  10. Financial entitiesas defined in Article 2, points (a) to (t) may, in accordance with Union and national sectoral law, outsource the tasks of verifying compliance with ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management requirements to intra-group or external undertakings. In case of such outsourcing, the financial entity remains fully responsible for the verification of compliance with the ICT riskany reasonably identifiable circumstance in relation to the use of network and information systems which, if materialised, may compromise the security of the network and information systems, of any technology dependent tool or process, of operations and processes, or of the provision of services by producing adverse effects in the digital or physical environment management requirements.