Joint Standard 2 – Are You Ready for South Africa’s Cyber Security Compliance Deadline?

Soon, the questions will start. “Are we compliant yet?” “Did we complete the audit?” “Who’s signing off on the cyber policy?” And if your financial institution isn’t ready by 1 June, those questions may be coming from regulators – not just your internal team. Joint Standard 2 of 2024 has officially kicked in, and the FSCA (Financial Sector Conduct Authority) and Prudential Authority are expecting every financial organization in South Africa to prove they’ve done the work. If your business hasn’t aligned with these new standards, you’re not just behind – you’re exposed.

What is Joint Standard 2?

Joint Standard 2 is a set of legally binding cybersecurity compliance regulations aimed at strengthening operational resilience in South Africa’s financial services sector. The regulations apply to a wide range of financial institutions, including:

• • Banks

• • Insurers

• • Retirement Funds

• • Investment Firms

• • Other licensed financial entities

The purpose of Joint Standard 2 is to ensure that financial institutions take proactive measures to secure their data and systems against cyber threats. This includes everything from risk assessments and incident response planning to securing third-party vendors and maintaining comprehensive documentation.

The Impact of Non-Compliance 

Failure to comply with Joint Standard 2 can have serious consequences. The FSCA and Prudential Authority have made it clear that they will be inspecting financial institutions for compliance and will penalize those that fall short. Penalties can include fines, reputational damage, and even potential restrictions on business operations. But the risks go beyond just regulatory fines. Cybersecurity threats are evolving, and financial institutions that aren’t compliant with Joint Standard 2 are at an increased risk of a cyber attack. In 2024, ransomware and phishing attacks targeting financial firms in South Africa, particularly in Johannesburg and Cape Town, have increased by more than 40%. Non-compliance with these new regulations could leave you exposed to these threats and their financial, operational, and reputational costs.

Key Requirements of Joint Standard 2 

To comply with Joint Standard 2, financial institutions must meet several key requirements:

1. 1. Establish a Formal Cybersecurity Strategy

      Your organization must have a clear, documented cybersecurity strategy. This strategy should outline how cyber risks are identified, assessed, mitigated, and monitored over time.

2. 2. Board-Level Accountability 

      The board of directors must take ownership of cybersecurity risk management. This means assigning a board sponsor for cyber security and ensuring that cyber risk is discussed regularly at board meetings.

3. 3. Conduct Regular Risk Assessments 

      Financial institutions must perform ongoing risk assessments to evaluate vulnerabilities in their systems and processes. These assessments should inform the institution’s cybersecurity strategy and identify areas of improvement.

4. 4. Maintain Tested Incident Response Plans 

      Every financial firm must have an incident response plan in place. The plan should outline the steps to take in case of a breach, including communication strategies, containment measures, and recovery procedures.

5. 5. Third-Party Risk Management

      Financial institutions often rely on third-party vendors for services such as cloud storage, data processing, and payment processing. Under Joint Standard 2, firms must ensure that third-party vendors meet the same cybersecurity standards, and that any risk posed by these vendors is properly managed.

6. 6. Compliance Reporting and Documentation 

      Your organization must maintain comprehensive documentation to demonstrate compliance with the standard. This includes records of risk assessments, incident response testing, and cybersecurity training programs. Regular reporting will be required to prove that your firm is meeting all the necessary requirements.

Your Compliance Plan 

Here’s how to get started and ensure your firm meets the June 1st deadline for compliance:

1. 1. Start with a Gap Analysis 

      Conduct a gap analysis to identify areas where your current cybersecurity strategy doesn’t align with Joint Standard 2. This will help you understand what needs to be improved before the deadline.

2. 2. Assign Cybersecurity Responsibility at the Board Level 

      Make cyber security a top priority by appointing a board-level sponsor. This individual will be responsible for overseeing the implementation of the cybersecurity strategy and ensuring that all compliance requirements are met.

3. 3. Conduct a Cyber Risk Assessment 

      Work with a trusted cybersecurity partner to conduct a comprehensive risk assessment. This will help you identify vulnerabilities in your systems and give you a roadmap for strengthening your defenses.

4. 4. Update Your Incident Response Plan 

      Test your incident response plan with simulated cyber attacks. This will help your team understand their roles during a real-world breach and ensure that your firm can respond swiftly and effectively to any cyber incident.

5. 5. Audit Your Third-Party Vendors 

      Evaluate your third-party vendors to ensure they meet the same cybersecurity standards. Make sure that they are compliant with Joint Standard 2 and have appropriate safeguards in place to protect your data.

Why It Matters 

Joint Standard 2 is more than just a regulatory requirement. It’s an opportunity to strengthen your organization’s cybersecurity defenses and build trust with your clients, partners, and regulators. By complying with the standard, you can demonstrate your commitment to protecting sensitive financial data and staying ahead of emerging threats. But compliance doesn’t stop with Joint Standard 2. It’s an ongoing process. Financial institutions must remain vigilant, regularly updating their cybersecurity strategies and monitoring for new threats. By embracing these standards, your firm will be better equipped to handle the evolving cyber threat landscape and ensure long-term resilience.

Conclusion: Don’t Wait Until It’s Too Late 

The June 1st deadline for Joint Standard 2 compliance is fast approaching, and the time to act is now. With increasing cyber threats targeting South African financial institutions, the costs of non-compliance are too high to ignore. By taking proactive steps to align your firm with Joint Standard 2, you can ensure that your cybersecurity strategy is robust, comprehensive, and compliant with regulatory requirements. Book your Zero-Cost Cyber Security Assessment now.

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