BAIT: Clearer Guidelines as a Basis for More Effective Implementation

If legal laypersons (as I am) read legal texts and regulations, they often miss clear and obligatory guidelines on how to implement them in practice. This is not least due to the fact that laws are generally designed to last and are not directly geared to concrete measures. This type of texts and provisions regularly contain references to the respective "state of the art".

For example, it is obvious that detailed requirements on how companies should implement the protection of the privacy of customers and employees cannot necessarily be found in the EU General Data Protection Regulation (GDPR). The appropriate implementation of such requirements is a considerable challenge and offers substantial scope for interpretation, not least when having to decide between "commercially sensible" and "necessary".

While many organizations currently focus on the implementation of the GDPR, the BAFIN (the German Federal Financial Supervisory Authority "Bundesanstalt für Finanzdienstleistungsaufsicht), published a revised version of its "Minimum requirements for risk management"("Mindestanforderungen an das Risikomanagement", MaRisk). Often unknown outside of the financial sector, this regulatory document provides a core framework for the overall implementation of financial business in Germany and subsequently worldwide. MaRisk concretize § 25a Paragraph 1 of the German Banking Act („Kreditwirtschaftsgesetz“, KWG) and are therefore its legally binding interpretation.  

The new version of MaRisk has been extended to include a requirements document that deals with its concrete implementation in banking IT, so to speak as a concretisation of MaRisk itself. This gives financial institutions clear and binding guidelines that become valid without a long-term implementation period. This document, entitled "Supervisory Requirements for IT in Financial Institutions" covers a large number of important topics in the implementation of measures to meet the IT security requirements for banks.

It does this by describing (and calling for) an appropriate technical and organizational design of IT systems for financial services. Particular attention has to be paid to information security requirements.  It aims at improving IT service continuity management and information risk management and defines how new media should be handled appropriately. Beyond pure technology, a variety of measures are designed to create an enterprise risk culture and to increase employee awareness for IT security and risk management. And it includes specific requirements for modernizing and optimizing the bank's own IT infrastructure, but gives clear advice also with regard to the aspect of outsourcing IT (think: cloud).

Financial institutions must define and implement an information security organization, in particular by appointing an information security officer. Adequate resource planning to support the defined information security must ensure that this agreed security level can actually be achieved.

For national and international banks, meeting these requirements is a essential challenge, in particular due to their immediate applicability.  But should you be interested in these requirements if you are not active in Germany or maybe you are not a bank at all?  

From my point of view: Yes! Because it is not easy to find such clear and practice-oriented guidelines for an appropriate handling of IT security within the framework of regulatory requirements. And it is to be expected that similar requirements will become increasingly relevant in other regions and sectors in the future.

KuppingerCole will continue to monitor this topic in the future and integrate the criteria of the BAIT as a relevant module for requirements definitions in the area of enterprise IT security.


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Privacy & the European Data Protection Regulation

The EU GDPR (General Data Protection Regulation), becoming effective May 25, 2018, will have a global impact not only on data privacy, but on the interaction between businesses and their customers and consumers. Organizations must not restrict their GDPR initiatives to technical changes in consent management or PII protection, but need to review how they onboard customers and consumers and how to convince these of giving consent, but also review the amount and purposes of PII they collect. The impact of GDPR on businesses will be far bigger than most currently expect. [...]

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