Effective IT governance and risk management is key because financial institutions rely heavily on technology to drive their operations. The standards stress the importance of establishing and maintaining a robust IT risk management and strategy aligned with business objectives, which will help to protect IT systems against potential threats.

Joint Standard 1 of 2023 on Information Technology (IT) Governance and Risk Management (the Standard) for financial institutions was published on November 11, 2023, and becomes effective on November 15, 2024.

Key aspects of the joint standard

1: Governance Frameworks

Financial institutions are required to establish robust IT governance frameworks aligned with their business objectives and regulatory requirements. Governing bodies are mandated to provide oversight and ensure that IT governance and risk management is an integral part of overall corporate governance.

Technology has to be managed in a transparent and accountable way, with clearly-defined roles and responsibilities, regular assessments of IT policies and procedures, and ongoing monitoring to ensure compliance with regulatory requirements.

2: Risk Management Strategies

Financial institutions face various risks, ranging from cyber threats to operational disruptions. The joint standards require institutions to conduct regular risk assessments, identify potential threats, and implement mitigation measures. By promoting a proactive approach, the standards aim to fortify financial institutions against potential disruptions, safeguarding both assets and customer trust.

3: IT System Resilience and Business Continuity

Financial Institutions are required to implement measures that enhance the robustness of their IT infrastructure, reducing the likelihood of system failures and data breaches. Institutions must conduct regular vulnerability assessments, penetration testing, have comprehensive incident response plans, and adopt innovative technologies to stay ahead of emerging threats.

These steps will help financial institutions to strengthen their defences against cyber-attacks, safeguard sensitive customer data and ensure the integrity of financial transactions.

The standards stress the importance of robust business continuity planning to minimise the impact of disruption on financial institutions. This involves developing and regularly updating contingency plans that outline procedures to be followed during and after unforeseen events. By prioritising business continuity, the standards aim to mitigate potential financial losses and maintain essential services for clients.

4. Data Management and Protection

Concerns about data breaches and privacy violations are growing. The standards underscore the importance of safeguarding customer information. They urge financial institutions to take stringent data protection measures, outlining specific requirements to protect sensitive customer data. These include encryption, access controls, and compliance with data protection regulations.

Challenges

1. Resource Intensiveness

Implementing comprehensive IT governance and risk management measures is costly and skills-intensive, especially for small- and medium-sized financial institutions. These entities have to find a balance between compliance and operational costs.

2. Adaptation Period

The financial industry is known for complex and intricate systems. Adapting to the new standards may involve significant changes to existing IT infrastructure, policies, and practices. Financial institutions could face disruptions during the adaptation period, impacting day-to-day operations and potentially causing temporary vulnerabilities.

3. Evolution of Threats

While the standards address current IT concerns, the fast-evolving nature of cyber threats raises questions about the long-term relevance of the prescribed measures. Financial institutions must remain agile and continually update their defences to stay ahead of emerging risks, requiring a sustained commitment to ongoing adaptation and improvement. 

Conclusion

The joint standard is a proactive response to the technological challenges facing the financial sector. Although it could strengthen IT security and enhance data protection, financial institutions will have to tackle resource constraints, adaptation periods, and dynamic threats. The standards will only be successful if they can be integrated seamlessly into the operations of financial institutions.

STANLIB is in the process of digitising its interactions with clients. Compliance with the standard will help us to differentiate our platforms in the market. Institutions that can demonstrate a commitment to robust IT governance and risk management are likely to attract clients who prioritise security, compliance and resilience. We can demonstrate that our platforms are secure, compliant, and resilient: they meet the evolving needs of clients and regulators and contribute towards a trustworthy and efficient financial ecosystem.