Navigating CPS 230: How Dasseti Helps APRA-Regulated Entities Prepare for New Operational Risk Requirements

This new standard, coming into effect on July 1, 2025, is designed to strengthen the operational resilience of APRA-regulated entities, including banks, insurers, and superannuation funds. CPS 230 represents a comprehensive overhaul of previous standards on outsourcing and business continuity management, marking a new era in operational risk oversight.

Dasseti’s COLLECT solution is purpose-built to help organizations efficiently meet these stringent new requirements, offering a suite of tools that automate compliance processes, enhance data quality, and improve oversight of third and fourth-party risks.

What Does CPS 230 Entail?

CPS 230 was finalized on July 17, 2023, and its purpose is clear: to ensure that APRA-regulated entities can manage and mitigate operational risks that could have significant adverse impacts on customers and the financial system. The standard replaces five existing regulations and introduces a more robust framework for managing critical operations.

Key CPS 230 Requirements:

1. Risk Management Framework
   Institutions must develop and maintain a detailed operational risk management framework, ensuring that all aspects of operational resilience are addressed.
2. Board Governance and Oversight
   The board of directors will bear increased responsibility for overseeing and managing operational risks. Governance structures must be strengthened, with boards required to actively review and set tolerance levels for disruptions.
3. Critical Operations
   Entities must identify and manage critical operations that, if disrupted, could have a material adverse impact on customers or the financial system. Stress testing and scenario analysis will be essential to ensure resilience.
4. Business Continuity and Prevention
   Robust business continuity plans must be implemented and tested regularly to ensure that institutions can continue critical operations during disruptions.
5. Service Provider Management
   CPS 230 places an increased focus on the oversight of material service providers, including the need to manage the risks of fourth-party providers. This expanded definition introduces a new layer of complexity in managing outsourced services.
6. Incident Reporting
   APRA-regulated entities must promptly report any significant operational incidents to APRA within specified timeframes.
7. Stress Testing and Scenario Analysis
   Institutions are required to regularly conduct stress testing and scenario analysis to evaluate their preparedness for operational risks.
   
   

Upcoming Compliance Deadlines

While the main compliance deadline is set for July 1, 2025, there is an additional deadline of July 1, 2026, for updating service provider agreements. These agreements must be brought in line with CPS 230’s requirements, particularly concerning the management of third and fourth-party providers. Dasseti’s platform is well-equipped to help institutions meet both deadlines by streamlining data collection, reporting, and the updating of agreements.

The Challenge of Managing Third-Party and Fourth-Party Risks

A key area of focus in CPS 230 is the oversight of service providers. APRA has expanded the definition of “material service providers” to include fourth-party providers, meaning that institutions must assess the risks associated with the service providers of their service providers. This additional layer of complexity necessitates enhanced data collection, due diligence, and monitoring to ensure compliance.

As highlighted in recent industry discussions, outsourcing oversight is no longer limited to third-party relationships; institutions must now extend their risk management processes to account for the performance and risks associated with fourth-party providers. This level of oversight is critical to ensuring operational resilience and avoiding service disruptions that could impact critical operations.

How Dasseti COLLECT Supports CPS 230 Compliance

Dasseti COLLECT is designed to help APRA-regulated entities navigate the complexities of CPS 230 compliance with ease. By automating data collection, enhancing data quality, and providing real-time risk monitoring, COLLECT enables institutions to focus less on manual tasks and more on mitigating operational risks.

Here’s how Dasseti can help:

• Automated Data Collection
  Dasseti COLLECT automates the process of collecting data from third and fourth-party service providers, eliminating manual processes and saving valuable time. This ensures a seamless flow of information that is essential for meeting CPS 230’s rigorous reporting and oversight requirements.
• Enhanced Data Quality and Integrity
  The platform’s validation processes ensure that data collected is accurate, complete, and reliable. By reducing errors in reporting, Dasseti helps institutions maintain a high standard of data integrity, which is essential for informed decision-making.
• AI-Powered Data Extraction
  Dasseti’s AI tools make it easy to extract unstructured data from service provider contracts, policies, and other documents. This allows institutions to quickly gather and assess the information needed to manage third and fourth-party risks.
• Comprehensive Risk Monitoring and Tracking
  Dasseti COLLECT’s predefined flags and alerts allow institutions to continuously monitor operational risks and respond to emerging issues before they escalate. The platform’s centralized assessment capabilities enable organizations to track and rate risks in a systematic and efficient manner.
• Customizable Workflows and Centralized Data Management
  Dasseti COLLECT can be fully customized to fit an organization’s unique processes, integrating seamlessly with existing systems. The platform also supports Outlook and SharePoint integrations, making it easy to track emails, contacts, and documents in one centralized location.
• Operational Due Diligence and Reporting
  Dasseti COLLECT provides institutions with the tools needed to perform thorough operational due diligence (ODD) on their service providers, ensuring compliance with CPS 230’s requirements. This includes customizable risk dashboards that allow for real-time reporting and board-level oversight.
  
  
  

Board Oversight and Accountability

CPS 230 places a strong emphasis on board-level governance. Boards must regularly review key risk indicators (KRIs) and be actively involved in managing operational risks. Dasseti’s platform provides comprehensive dashboards and reporting tools that ensure boards are kept informed of operational resilience, third-party risks, and other critical metrics. This enables boards to make informed, data-driven decisions that align with CPS 230’s governance expectations.

Addressing ESG, Cybersecurity, and Diversity Challenges

As part of the broader operational risk management framework, CPS 230 emphasizes the need to manage ESG (Environmental, Social, and Governance) and cybersecurity risks. Dasseti COLLECT integrates ESG metrics, allowing institutions to meet emerging regulatory requirements and investor expectations. In addition, the platform helps institutions address cybersecurity risks by continuously monitoring vulnerabilities in service providers’ systems.

Preparing for CPS 230: The Time to Act is Now

With the July 2025 deadline looming, APRA-regulated entities must act swiftly to ensure they are prepared for CPS 230’s operational risk management requirements. Dasseti’s COLLECT solution offers the tools, automation, and insights needed to comply with the new standard while enhancing operational resilience and protecting critical operations.

By leveraging Dasseti COLLECT, institutions can streamline their compliance efforts, reduce operational risk, and ensure they are fully prepared for the regulatory changes ahead.

Contact Dasseti today to learn more about how we can help you navigate CPS 230’s complexities and strengthen your operational resilience.

Header Image photo by Liam Pozz on Unsplash