Who does CPS 234 apply to?

Definition of prudential standard CPS 234

CPS 234, or the Prudential Standard CPS 234 Information Security, is a regulatory framework introduced by the Australian Prudential Regulation Authority (APRA) to ensure the security of data and information within the financial services industry. It applies to all APRA-regulated entities, including banks, insurers, superannuation funds, and other financial institutions. CPS 234 sets out the requirements for these entities to have robust security controls and capabilities in place, including the establishment of a comprehensive security policy framework, clear roles and responsibilities for security functions, systematic testing of control effectiveness, and the ability to respond promptly to potential security incidents. The standard also requires entities to identify and assess potential security threats, vulnerabilities, and control weaknesses, and to implement appropriate security measures to mitigate these risks. Compliance with CPS 234 is expected to be maintained by senior management and form part of an entity's sound operational practices.

Who does CPS 234 apply to?

CPS 234 applies to a range of APRA-regulated entities, including banks, general insurers, life insurers, and health insurers. These entities are responsible for the management and protection of their information assets in order to ensure the sound operation of their business and maintain the trust of their customers.

Under CPS 234, APRA-regulated entities are required to implement a robust information security framework that is commensurate with the size and complexity of their business operations and the extent of the security threats they face. This framework should include policies, procedures, and controls that address areas such as asset identification, security roles and responsibilities, security control assurance, and incident response.

Furthermore, APRA-regulated entities are expected to continuously monitor and test the effectiveness of their security controls, as well as conduct systematic testing of their security measures. They should also have measures in place to promptly detect and respond to potential security incidents or breaches.

By adhering to CPS 234, APRA-regulated entities demonstrate their commitment to maintaining the security of their customers' information and protecting the financial services sector as a whole.

Regulatory environment

In the regulatory environment governed by CPS 234, APRA-regulated entities, including financial institutions, private health insurers, superannuation funds, and non-operating holding companies, are required to implement strict information security measures to ensure the sound operation of the financial services industry. This prudential standard, enforced by the Australian Prudential Regulation Authority (APRA), aims to protect against security threats and potential breaches. It mandates the development and implementation of comprehensive security policies, procedures, and controls tailored to the specific size, complexity, and security risks faced by each entity. APRA-regulated entities must also conduct regular testing to verify the effectiveness of security controls and maintain a robust incident response capability to promptly detect, respond to, and mitigate any material information security incidents. This regulatory framework ensures that the industry operates within stringent compliance requirements, safeguarding both the entities and the customers they serve.

Overview of australian prudential regulation authority (APRA)

The Australian Prudential Regulation Authority (APRA) is a statutory authority that regulates and supervises various financial institutions in Australia. Its primary role is to ensure the stability, resilience, and sound operation of the financial system. APRA's regulatory oversight extends to banks, credit unions, building societies, insurance companies, private health insurers, superannuation funds, and non-operating holding companies.

APRA has a wide range of responsibilities in the financial services industry. It sets prudential standards and requirements that institutions must meet to ensure their security and compliance. APRA also conducts regular assessments and supervisory activities to monitor the financial condition and risk management practices of these institutions. It assesses the adequacy of capital, monitors market integrity, and addresses potential risks to the financial system.

Additionally, APRA plays a crucial role in enforcing compliance requirements. It has the power to take enforcement action and issue penalties if institutions fail to meet regulatory standards or breach their obligations. APRA also collaborates with other regulators, industry bodies, and stakeholders to develop and implement policies that promote stability and protect the interests of consumers.

Purpose of CPS 234

The purpose of CPS 234 is to strengthen information security frameworks and protect APRA-regulated entities from cyberattacks and risks. This prudential standard sets out the requirements for these entities to establish and maintain robust security measures to safeguard sensitive information.

Under CPS 234, APRA-regulated entities are mandated to identify and classify their information assets based on their criticality and value. This ensures that appropriate security controls can be implemented and resources allocated effectively. Entities must also define clear security roles and responsibilities to ensure accountability and effective management of information security.

To comply with CPS 234, entities are required to implement and regularly test security controls to mitigate identified security threats and vulnerabilities. They must establish incident management procedures to effectively respond to and manage potential security incidents. Internal audits are necessary to assess the effectiveness of security measures and identify any control weaknesses or gaps.

In the event of a security breach or material information security incident, entities are required to promptly notify APRA and report on the incident, including the actions taken to address the breach and prevent future occurrences.

By implementing CPS 234, APRA-regulated entities can enhance their overall security capability and reduce the likelihood and impact of cyber incidents. It aims to protect both the entities themselves and the stability and integrity of the financial services sector.

Scope of entities subject to CPS 234

The scope of entities subject to CPS 234 includes both Australian and foreign entities operating in the financial services sector. This includes foreign ADIs (Authorized Deposit-Taking Institutions), foreign general insurers, and foreign life insurance companies.

For foreign entities, compliance requirements under CPS 234 may differ from those imposed on Australian entities. Specifically, foreign entities operating as Australian branch operations are required to comply with CPS 234 to the extent that it is not contrary to the legal and regulatory requirements of their home jurisdiction. This recognizes the need to align with international standards while also accounting for any unique circumstances or regulatory frameworks that may exist in the entity's home jurisdiction.

Security capability requirements

Security capability requirements under CPS 234 apply to a wide range of entities in the financial services industry. This includes APRA-regulated entities such as private health insurers, superannuation funds, and life insurers, as well as non-operating holding companies and foreign life insurance companies. These entities are required to have a robust security capability that is commensurate with their business environment and the risks they face. This involves establishing a security policy framework, implementing appropriate security controls and measures, and ensuring that senior management and staff have clear security roles and responsibilities. Entities must also identify and assess security threats and vulnerabilities, respond to and recover from security incidents, and regularly test and review the effectiveness of their security controls. By implementing these security capability requirements, entities are better able to protect their sensitive information and maintain the sound operation of their business.

Asset identification and classification

Asset identification and classification are critical aspects of complying with CPS 234, the prudential standard for information security in the financial services industry. In order to effectively protect sensitive information, organizations must first identify and classify their assets.

Asset identification involves taking an inventory of all assets within the organization that store or process information. This includes hardware such as servers, computers, and mobile devices, as well as software applications and databases. Additionally, it is important to identify any external assets that interact with the organization's systems, such as third-party vendors or cloud services.

Once the assets have been identified, they need to be classified based on their criticality and sensitivity. Criticality refers to the importance of the asset to the organization's business operations, while sensitivity refers to the level of confidentiality, integrity, and availability required for the asset. By classifying assets, organizations can prioritize their security measures and allocate resources accordingly.

Assets with a higher classification level, such as sensitive customer data or critical infrastructure, require stronger security measures and controls. These may include encryption, access controls, regular monitoring, and incident response plans. On the other hand, non-sensitive assets may have more relaxed security measures.

The interrelationships between sensitive and non-sensitive assets are important to consider, as a security incident involving a non-sensitive asset can still have a cascading effect on sensitive assets. For example, if a malicious actor gains access to a less critical system, they may exploit vulnerabilities and move laterally within the network to gain access to sensitive assets.

Ultimately, effective asset identification and classification allows organizations to implement tailored and proportionate security measures to protect their information assets from potential security incidents. By understanding the criticality and sensitivity of each asset, organizations can prioritize their efforts and investments to ensure the highest level of protection.

Security policy framework

The security policy framework is an essential component of an organization's information security program. It serves as a set of guidelines and procedures to ensure the confidentiality, integrity, and availability of information and protect the organization against security threats and vulnerabilities.

The framework consists of various policies that define the organization's approach to information security. These policies should cover areas such as access control, data classification and handling, incident response, and employee awareness and training. The policies provide a roadmap for implementing security controls and best practices throughout the organization.

To maintain an effective security policy framework, it is crucial to regularly update the policies to align with evolving threats and vulnerabilities. This requires a thorough assessment of the organization's risk landscape, keeping up with industry trends, and staying up-to-date with the latest security standards and regulations. By regularly reviewing and updating the policies, organizations can ensure they remain relevant and effective in mitigating new and emerging risks.

In implementing the security policy framework, various parties within the organization play crucial roles and have specific responsibilities. Senior management is responsible for providing the necessary resources and support for implementing and maintaining the policies. The information security team is responsible for developing and managing the policies and overseeing their implementation across the organization. Employees have a responsibility to adhere to the policies and report any security incidents or concerns.

Security requirements and controls

CPS 234 mandates rigorous information security requirements and controls that organizations need to implement to ensure the protection of sensitive data and mitigate security risks. These measures aim to strengthen the overall security posture and resilience of critical systems and infrastructure.

The Board and Executive Leadership Team play pivotal roles in owning information security and are responsible for setting the strategic direction and oversight of the organization's security program. They are accountable for establishing a culture of security and allocating appropriate resources to implement and maintain effective information security controls.

To comply with CPS 234, organizations need to develop and maintain an information security policy framework. This framework outlines the organization's approach to information security, including policies and procedures governing access control, data classification, incident management, and employee awareness and training. It provides a roadmap for the implementation of security controls and best practices across the organization.

An incident management plan and capability are crucial components of CPS 234 compliance. Organizations must establish robust incident response protocols to effectively detect, respond to, and recover from security incidents. Regular testing of control effectiveness is also required to ensure that the implemented security measures are working as intended and are capable of protecting against potential threats and vulnerabilities.

By adhering to CPS 234's information security requirements, including the establishment of a comprehensive policy framework, incident management plan, and regular control testing, organizations can significantly enhance their security posture and protect against potential cyber threats.

Security functions and roles

Entities subject to CPS 234 must establish clear security functions and roles to ensure the effective implementation of their information security capabilities. These roles and responsibilities are critical for maintaining the security of information assets.

One key security function is the Chief Information Security Officer (CISO) or equivalent position. The CISO is responsible for overseeing the organization's information security program and ensuring its alignment with CPS 234 requirements. They are tasked with developing and implementing the information security policy framework and coordinating security measures across the organization.

The role of the Information Security Officer (ISO) is also important. The ISO supports the CISO in developing and implementing information security policies and procedures. They are responsible for managing and monitoring the organization's information security controls and conducting regular risk assessments. Additionally, the ISO plays a crucial role in incident response and ensuring the timely and effective resolution of security incidents.

Other security roles within CPS 234 may include IT administrators, security analysts, and risk and compliance personnel. IT administrators are responsible for managing and maintaining the organization's information technology systems and infrastructure. Security analysts perform ongoing monitoring and analysis of security threats and vulnerabilities. Risk and compliance personnel ensure that security measures and controls are in line with CPS 234 requirements and compliance obligations.

By establishing these security functions and roles, entities can effectively implement their information security capabilities and protect their information assets from security threats and breaches.

Sound operation procedures for information security

Sound operation procedures for information security are crucial for maintaining a strong information security capability within an organization. These procedures ensure that the organization's sensitive information is protected against unauthorized access, disclosure, alteration, and destruction.

To achieve sound operation, several key steps and practices need to be followed. Firstly, the organization needs to establish an information security policy framework that outlines the objectives, principles, and requirements for protecting information assets. This framework should be communicated to all employees and stakeholders.

Secondly, asset identification and classification should be conducted to determine the value and sensitivity of information assets. This helps in prioritizing the implementation of security controls based on the risk associated with each asset.

Thirdly, regular risk assessments should be conducted to identify and evaluate potential security threats and vulnerabilities. This helps in understanding the organization's risk profile and enables the implementation of appropriate controls to mitigate these risks.

Fourthly, security controls and measures need to be implemented and tested for their effectiveness. This includes measures such as access controls, encryption, firewalls, intrusion detection systems, and security awareness training for employees.

Finally, ongoing monitoring, analysis, and reporting of security incidents should be performed. This helps in detecting and responding to security breaches in a timely manner, minimizing the impact on the organization.

By following these sound operation procedures, organizations can maintain a strong information security capability and safeguard their sensitive information from potential security incidents.

Detection and response to material information security incidents

APRA-regulated entities are required to have robust measures in place to detect and respond to material information security incidents. These incidents can include unauthorized access to sensitive data, cyber attacks, or breaches of security controls.

To detect such incidents, entities should have appropriate security controls and monitoring systems in place. This can include intrusion detection systems, log monitoring, and regular security assessments. These measures help in identifying any potential security breaches or vulnerabilities in a timely manner.

Once an incident is detected, entities are required to respond promptly to mitigate the impact and minimize any potential harm. This can involve isolating affected systems, conducting forensic investigations, and implementing remediation measures. Entities should also consider notifying law enforcement authorities, as well as affected individuals or customers, if necessary.

In terms of reporting requirements, APRA has outlined specific timeframes for notifying them of material information security incidents. Entities are required to report incidents within 72 hours of becoming aware of them. This allows APRA to assess the severity of the incident and provide guidance or support as needed.

The consequences of information security incidents can be significant for APRA-regulated entities. These can include reputational damage, financial losses, regulatory investigations, and potential legal actions. Entities should therefore prioritize the detection and response to such incidents to safeguard their operations and protect the interests of their stakeholders.

Maintaining the security capability commensurate with business environment needs

Maintaining the security capability commensurate with the business environment needs is of utmost importance for regulated entities. As technology evolves and cyber threats become increasingly sophisticated, entities must adapt their information security measures to effectively protect their systems, data, and stakeholders.

To assess the sufficiency of their information security capability, regulated entities should regularly evaluate their controls and practices to address changes in vulnerabilities and threats. This involves conducting systematic testing, such as penetration testing and vulnerability assessments, to identify any security control weaknesses and potential gaps in the security framework.

When evaluating their information security capabilities, entities should consider key factors such as the nature of their business operations, the sensitivity and criticality of the data they handle, the level of threats and vulnerabilities they face, and the potential impact of a security breach. They should also take into account any legal and compliance requirements specific to their industry.

By maintaining a security capability that aligns with the business environment needs, regulated entities can proactively address emerging security threats and minimize the risk of security incidents. This includes implementing appropriate security controls, monitoring systems, incident response procedures, and staff training. Regular assessments and evaluations ensure that security measures remain effective and adaptable to evolving risks, allowing entities to safeguard their systems, protect customer information, and maintain trust within their industry.

Monitoring, testing, and evaluation of the information security performance

Monitoring, testing, and evaluation are crucial components of ensuring the effectiveness of information security controls within regulated entities, as outlined in CPS 234. Organizations must regularly monitor their information security performance to identify any security threats, vulnerabilities, or breaches that may compromise their systems and data.

Monitoring involves the continuous assessment of security measures, including the identification of potential security incidents and the detection of any actual breaches. Organizations should have robust procedures in place to promptly respond to such incidents and mitigate any harm caused.

Testing is essential to validate the effectiveness and efficiency of information security controls. This can be achieved through various methods such as penetration testing and vulnerability assessments, which help identify any weaknesses or gaps in the security framework. By conducting systematic testing, organizations can proactively address any control deficiencies and implement appropriate corrective measures.

Evaluation is the process of assessing the overall performance of information security controls. This includes evaluating the adequacy of security measures to protect against potential threats and ensuring compliance with relevant regulatory requirements. Organizations should regularly review and assess their security practices and controls to identify areas for improvement and implement necessary enhancements.

To maintain a strong information security capability, organizations should establish a comprehensive performance evaluation framework. This includes defining performance metrics, conducting regular audits, and engaging independent specialists to test the effectiveness of security controls.

By actively monitoring, testing, and evaluating information security performance, regulated entities can proactively identify and address vulnerabilities, ensuring the confidentiality, integrity, and availability of their systems and data.