Introduction
In today’s rapidly evolving digital landscape, data breaches are at their highest levels since 2020, posing a growing concern for Australian financial services institutions. However, regulator expectations for data risk management are higher than ever, with sustainable and effective risk management involving more than merely preventing breaches.
Recent high-profile incidents have not only led to hefty fines and regulatory actions but have also tarnished reputations and imposed stringent capital requirements. For instance, Australian banks have faced enforceable undertakings due to deficiencies in their risk governance frameworks. These issues highlight an urgent call for comprehensive data risk practices.
This article explores the importance of establishing robust data risk practices, focusing on governance, data quality, oversight, and competitive advantages through informed decision-making.
I. The Shifting Landscape of Data Risk Management: Protecting Exposed Data under increasing complexity
Data risk management is more crucial than ever, with significant financial and reputational damage resulting from improper handling. Within Australia, the financial services industry has faced many high-profile incidents, leading to substantial fines and loss of customer trust. These incidents underscore the urgent need for strong data risk practices.
As APRA noted in their recent publication, "Data is key to many, if not all, the decisions an entity must make and as such is the 'crown jewels' for most entities." This emphasises the critical importance of protecting data assets. Adhering to enforceable regulatory standards such as CPS 230 is crucial for compliance, while following non-enforceable guidelines like CPG 235 aids in further mitigating risks and building organisational resilience.
II. Beyond Data Breaches: Governance and Regulatory Compliance
Effective data risk management goes beyond preventing breaches, addressing governance deficiencies and regulatory compliance. As the Australian Privacy Commissioner stated in a recent notifiable data breach report, "We are moving into a new era in which our expectations of entities are higher." This underscores the increasing scrutiny and higher standards expected from organisations.
Organisations must adopt proactive governance and compliance measures by implementing robust risk assessment frameworks, establishing clear accountability structures, and continuously monitoring compliance to mitigate risks and enhance resilience.
III. What Other Australian Organisations Are Doing
To gain insights into best practices, it is crucial to understand how other institutions address data risks. By exploring their approaches to data risk management and breach response, we can learn valuable lessons and adapt them to our own organisations. Many institutions are focus on four key areas to establish robust data risk management:
IV. Competitive Advantages Through Informed Decision-Making
Robust data governance and risk management can offer competitive advantages. Effective data governance ensures high data quality and supports the transition to a data-led organisation, enabling informed and timely decision-making. This leads to improved operational efficiency, better customer experiences, and a stronger market position.
Conclusion
Establishing data risk practices is a critical priority for Australian financial services institutions. This initial article has highlighted the importance of data risk management and the need for organisations to adapt their strategies in response to the evolving threat landscape.
In upcoming articles, we will delve deeper into the four key areas discussed above, providing actionable insights and practical guidance based on further research and expert input. By prioritising data risk practices and learning from the experiences of other organisations, financial institutions can navigate the complex landscape of data breaches and safeguard sensitive customer information. Furthermore, effective data governance can support becoming a data-led organisation, enabling informed and timely decision-making that offers a competitive edge.
For a confidential discussion on how to enhance your data risk management strategy or to conduct a regulatory compliance assessment, please contact Simon Crisp, Partner, or Shannon Braun, Director.