APRA CPS 234
Australian prudential standard for financial information security
Basel III
Global framework for bank capital, leverage, and liquidity resilience
Quick Verdict
APRA CPS 234 mandates information security governance for Australian financial firms, requiring board oversight and incident notifications. Basel III sets global capital and liquidity standards for banks to enhance resilience. Organizations adopt them for regulatory compliance and operational stability.
APRA CPS 234
APRA Prudential Standard CPS 234 Information Security
Key Features
- Board ultimate responsibility for information security
- 72-hour notification to APRA for material incidents
- Extends requirements to third-party managed assets
- Systematic independent testing of security controls
- Asset classification by criticality and sensitivity
Basel III
Basel III: Finalising post-crisis reforms
Key Features
- Strengthened CET1 capital requirements and buffers
- Non-risk-based leverage ratio minimum 3%
- Liquidity Coverage Ratio for 30-day stress
- Net Stable Funding Ratio for one-year horizon
- Enhanced Pillar 3 RWA comparability disclosures
Detailed Analysis
A comprehensive look at the specific requirements, scope, and impact of each standard.
APRA CPS 234 Details
What It Is
APRA Prudential Standard CPS 234 (Information Security) is a binding regulation for Australian financial institutions. Effective from 1 July 2019, it mandates resilient information security capabilities against cyber threats. Its risk-based approach requires controls commensurate with vulnerabilities, threats, and asset criticality, extending to third-party managed assets.
Key Components
- Governance: Board ultimate accountability, defined roles.
- Risk management: Asset classification by criticality/sensitivity.
- Controls: Lifecycle protections for confidentiality, integrity, availability.
- Testing/assurance: Systematic independent testing, internal audit.
- Incident response: 72-hour APRA notifications for material incidents. No fixed controls; focuses on outcomes with policy frameworks.
Why Organizations Use It
Ensures prudential compliance, minimizes incident impacts on customers. Reduces operational risks, enhances resilience. Builds stakeholder trust, avoids penalties. Strategic for third-party oversight in complex ecosystems.
Implementation Overview
Phased: Gap analysis, policy development, asset inventory, testing programs. Applies to APRA-regulated entities (banks, insurers, super funds). No certification; APRA supervision via notifications, audits. Proportional to entity size/risk.
Basel III Details
What It Is
Basel III is the global regulatory framework for bank prudential standards issued by the Basel Committee on Banking Supervision (BCBS). It addresses post-financial crisis weaknesses in capital quality, leverage, and liquidity through a risk-based, multi-metric approach combining risk-weighted assets (RWA), non-risk-based measures, and standardized requirements.
Key Components
- **Three PillarsPillar 1 (capital, leverage, LCR, NSFR), Pillar 2 (supervisory review/ICAAP), Pillar 3 (disclosures).
- Core elements: CET1 (4.5%), buffers (2.5% CCB + others), leverage ratio (3%), LCR/NSFR.
- Built on revised RWA methods, output floor, and enhanced disclosures (KM1, LR1, CDC).
- Compliance via national implementation, no central certification.
Why Organizations Use It
Banks adopt for regulatory compliance, enhanced resilience against shocks, reduced model risk, and improved comparability. It drives strategic balance-sheet optimization, stakeholder trust, and competitive positioning amid jurisdictional variations.
Implementation Overview
Phased enterprise transformation: gap analysis, data/system builds, governance, testing. Applies to internationally active banks globally; involves QIS, parallel runs, ongoing reporting/audits. (178 words)
Key Differences
| Aspect | APRA CPS 234 | Basel III |
|---|---|---|
| Scope | Information security governance and cyber resilience | Capital, leverage, liquidity requirements |
| Industry | Australian financial institutions (ADIs, insurers) | Global banks and internationally active institutions |
| Nature | Mandatory prudential standard with notifications | Global minimum standards implemented nationally |
| Testing | Systematic independent control testing annually | Stress testing, ICAAP, model validation |
| Penalties | Supervisory actions, remediation directions | Fines, capital add-ons, business restrictions |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about APRA CPS 234 and Basel III
APRA CPS 234 FAQ
Basel III FAQ
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