Who should manage Material Services Providers to ensure compliance with CPS230?

CPS 230, issued by the Australian Prudential Regulation Authority (APRA), outlines operational risk management requirements for financial institutions. Specifically, it emphasises robust supplier risk management practices, including due diligence, monitoring, and compliance with regulatory guidelines.

From 2025, managing 3rd party suppliers under CPS 230 will be a critical task, and there are compelling reasons why it should be handled by specialised teams rather than solely by business units:

Expertise and Focus:

Specialised Teams: Dedicated teams with expertise in third party risk management, compliance, and operational resilience can focus and provide visibility solely on risks arising from upstream and downstream vendors providing material services.

Holistic View: These teams consider the broader impact of supplier relationships, ensuring alignment with organisational goals and regulatory requirements.

Independence and Objectivity:

Avoiding Conflicts: Business units may prioritise commercial interests over risk mitigation. Independent teams can objectively assess risks without conflicts of interest.

Risk Assessment: Specialised teams conduct thorough due diligence, risk assessments, and ongoing monitoring, reducing bias and ensuring robust decision-making.

Regulatory Compliance:

CPS 230 Requirements: Compliance with CPS 230 demands a structured approach. Specialised teams can ensure adherence to regulatory guidelines.

Documentation and Reporting: These teams maintain accurate records, track supplier performance, and provide necessary reports to regulators.

In summary, entrusting supplier risk management to specialised teams enhances transparency, accountability, and regulatory compliance.

Please share your thoughts on the topic and where you see will be the key challenges with CPS230 supplier management implementation in 2025.

If you are interested in discussing this topic please reach out.