Local banks invest big in tech for risk management
Sri Lankan banks are spending top dollars on improving the technology risk management of their systems, after the Central Bank guidelines in 2021.
The Monetary Board, under the Banking Act No. 30 of 1988, issued directions aimed at enhancing technology risk management and resilience for licensed commercial and specialised banks four years ago to be implemented in three stages. The framework institutes minimum regulatory requirements for technology risk management and resilience, specifically for licensed banks. It emphasises the need for compliance-based on the sensitivity of data, the criticality of information systems, and the type of information system infrastructure utilised.
These directions empower the Monetary Board to urge compliance among licenced banks regarding their operational conduct. The regulatory framework applies to all licenced banks, including their operations through agents and third-party service providers, mandating adherence to specified requirements.
The Board of Directors of each bank is responsible for establishing oversight measures to implement the technology risk management and resilience requirements outlined in the regulatory framework. An effective governance framework must be approved by the Board to ensure prudent management of technology risks.
A top official from a cybersecurity company told The Sunday Times Business that the entire personal financial sector has been procuring cybersecurity and malware prevention software. “Over the past few years, we have witnessed a remarkable rise in sales in these products. The banks are spending more on their IT budgets to ensure that they are properly certified in this area,” he said.
The regulator has directed banks to assess technology risk as part of their internal capital adequacy assessment process and maintain adequate capital to address potential technology risks. Their internal audit must evaluate compliance with technology risk management regulations and report findings to the board at least annually.
HNB Managing Director and Chief Executive Officer Damith Pallewatte told The Sunday Times Business that cybersecurity is about making people more educated and aware and instilling it as a ritual in the culture of the bank. “It is important to have regular training, and we are securing the perimeter and the defensive and offensive mechanisms in terms of the IT and cyber security systems, which are adopted by a changing environment,” he said, adding that HNB invests in cyber security, malware and ransomware prevention extensively.
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