Cybersecurity Policy Template
Risk Appetite and Tolerance Policy for ICT Services
1. Introduction
1.1 Purpose and Scope: This policy defines the acceptable levels of risk related to Information and Communication Technology (ICT) services within [Organization Name]. It establishes a framework for managing ICT risks, focusing on maintaining operational resilience and ensuring the continued availability of critical services, in line with the requirements of the Digital Operational Resilience Act (DORA). This policy applies to all ICT systems, applications, and infrastructure that support the organization's operations, including but not limited to network infrastructure, data centers, applications, and cloud services.
1.2 Relevance to DORA: DORA mandates that financial institutions establish and maintain robust operational resilience frameworks. This policy directly supports DORA's requirements by:
Defining clear risk appetite and tolerance levels for ICT risks.
Identifying and classifying critical ICT services.
Establishing mechanisms for managing and mitigating ICT-related disruptions.
Ensuring adequate reporting and oversight of ICT risks.
2. Key Components
The key components of this Risk Appetite and Tolerance Policy include:
Definition of Risk Appetite and Tolerance: Clearly articulating the organization's willingness to accept risk and the limits beyond which risks are unacceptable.
Criticality Assessment of ICT Services: Identifying and classifying ICT services based on their impact on business operations.
Risk Categories and Thresholds: Defining specific risk categories (e.g., availability, confidentiality, integrity) and setting numerical thresholds for each.
Risk Response Strategies: Outlining strategies for addressing risks based on their severity and likelihood.
Monitoring and Reporting Framework: Establishing mechanisms for monitoring, reporting, and reviewing ICT risks.
Escalation Procedures: Defining clear escalation paths for managing significant ICT incidents.
3. Detailed Content
3.1 Definition of Risk Appetite and Tolerance:
In-depth explanation: Risk appetite describes the overall level of risk the organization is willing to accept in pursuit of its strategic objectives. Risk tolerance defines the acceptable deviation from the risk appetite. For example, the organization might have a high risk appetite for innovation but a low risk tolerance for security breaches impacting customer data.
Best practices: Use quantitative and qualitative measures to define risk appetite and tolerance. Clearly communicate these definitions to all stakeholders.
Example: "The organization accepts a moderate risk appetite for ICT-related incidents. However, the organization's risk tolerance for incidents impacting critical payments systems is extremely low, with an acceptable downtime of less than 15 minutes. Any downtime exceeding this threshold requires immediate escalation."
Common pitfalls: Vague or overly broad definitions; lack of alignment with organizational strategy; inconsistent application across departments.
3.2 Criticality Assessment of ICT Services:
In-depth explanation: This section identifies and categorizes ICT services based on their importance to the organization's operations. It uses a standardized methodology (e.g., impact assessment matrix) to determine the criticality of each service.
Best practices: Involve representatives from various business units to ensure comprehensive assessment. Regularly review and update the criticality assessment to reflect changes in business operations.
Example: A payment processing system would be classified as critical, while an internal communication platform might be classified as non-critical. The assessment should consider factors like financial impact, regulatory compliance, reputational damage and operational disruption.
Common pitfalls: Incomplete or inaccurate assessments; failure to account for interdependencies between services; lack of regular review and updates.
3.3 Risk Categories and Thresholds:
In-depth explanation: This section defines specific ICT risk categories (e.g., availability, confidentiality, integrity) and sets quantitative and qualitative thresholds for each. These thresholds indicate when a risk crosses from acceptable to unacceptable.
Best practices: Use standardized metrics (e.g., Mean Time To Recovery (MTTR), Mean Time Between Failures (MTBF), Key Risk Indicators (KRIs)) to measure risk levels.
Example: For availability, the threshold might be a maximum downtime of 4 hours per year for non-critical services and 1 hour per year for critical services. For confidentiality, the threshold might be zero data breaches involving customer Personally Identifiable Information (PII).
Common pitfalls: Arbitrary or unrealistic thresholds; failure to consider the context of different risk categories; lack of clear definitions for metrics.
3.4 Risk Response Strategies:
In-depth explanation: This section outlines how the organization will respond to ICT risks, depending on their severity and likelihood. This includes avoidance, mitigation, transfer, and acceptance strategies.
Best practices: Develop detailed response plans for each risk category and critical service. Ensure these plans are tested regularly.
Example: For a risk of a cyberattack, the response might involve implementing stronger security controls (mitigation), purchasing cyber insurance (transfer), and developing a business continuity plan (preparation).
Common pitfalls: Insufficient detail in response plans; lack of testing and validation; failure to consider recovery time objectives (RTO) and recovery point objectives (RPO).
3.5 Monitoring and Reporting Framework:
In-depth explanation: This section describes how the organization will monitor ICT risks and report on their status. It includes key performance indicators (KPIs), reporting frequency, and escalation procedures.
Best practices: Use automated tools to collect and analyze data. Establish clear reporting lines and responsibilities.
Example: Weekly reports on the status of critical services, monthly reports on security incidents, and quarterly reports on overall ICT risk posture.
Common pitfalls: Inadequate data collection; insufficient reporting frequency; lack of clear escalation procedures.
3.6 Escalation Procedures:
In-depth explanation: This section outlines the process for escalating significant ICT incidents or risks that exceed pre-defined thresholds. It identifies the responsible individuals and the escalation paths.
Best practices: Establish clear communication channels and timelines for escalation. Regularly test and update escalation procedures.
Example: If a critical service experiences an outage exceeding the defined tolerance, the incident manager will escalate the issue to the CIO within 30 minutes, who will then inform the executive team.
Common pitfalls: Unclear escalation paths; lack of communication; insufficient response time.
4. Implementation Guidelines
Step-by-step process:
1. Establish a Risk Management Committee: Assemble a cross-functional team to oversee the implementation and management of this policy.
2. Conduct a Criticality Assessment: Identify and categorize critical ICT services.
3. Define Risk Appetite and Tolerance: Establish clear quantitative and qualitative measures for acceptable risk levels.
4. Develop Risk Response Strategies: Create detailed plans for addressing risks.
5. Implement Monitoring and Reporting Mechanisms: Establish KPIs and reporting procedures.
6. Conduct Regular Training: Ensure all relevant personnel understand the policy and their roles.
7. Conduct regular testing and simulations: to validate processes and readiness.
Roles and Responsibilities: Clearly define roles and responsibilities for risk management, including the Chief Information Security Officer (CISO), IT Operations Manager, and Business Unit Heads.
5. Monitoring and Review
Monitoring effectiveness: Regularly monitor the effectiveness of the policy by reviewing key risk indicators (KRIs), incident reports, and audit findings.
Frequency and process: Review and update the policy annually, or more frequently if significant changes occur in the organization's business operations or regulatory landscape. The review should include a gap analysis against DORA requirements and best practices.
6. Related Documents
Incident Management Policy
Business Continuity and Disaster Recovery Plan
Information Security Policy
Data Governance Policy
Cyber Security Policy
7. Compliance Considerations
This Risk Appetite and Tolerance Policy addresses several key aspects of DORA, including:
Article 3 (Operational Resilience): By defining acceptable risk levels and implementing risk mitigation strategies, the policy contributes to maintaining the operational resilience of the organization.
Article 4 (ICT Risk Management): The policy establishes a framework for managing ICT risks, including identifying, assessing, and mitigating those risks.
Article 5 (Incident Reporting): The escalation procedures defined in this policy facilitate timely incident reporting to relevant authorities.
Article 6 (Information Sharing): The policy facilitates information sharing within the organization and with relevant authorities as necessary.
This policy should be reviewed and updated to reflect changes in DORA regulations and best practices. It is crucial to ensure legal compliance with all relevant data protection laws (GDPR, CCPA, etc.) when implementing this policy.
This template provides a comprehensive framework. Remember to tailor it to your specific organization's context, size, and the complexity of its ICT infrastructure. The specific thresholds and metrics should be determined through a rigorous risk assessment process involving relevant stakeholders. Legal counsel should be consulted to ensure full compliance with all applicable laws and regulations.
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