Banks and fin institutions must build risk management systems to combat unprecedented tech outages: RBI
Aug 8, 2024
Synopsis
The Reserve Bank of India raised concerns over third-party outsourcing of technology by banks and financial institutions, citing a global tech outage. RBI Governor Shaktikanta Das stressed the importance of risk management and robust business continuity plans to handle such disruptions and ensure smooth service delivery.
Reserve Bank of India (RBI) Governor Shaktikanta DasReutersReserve Bank of India (RBI) Governor Shaktikanta Das reiterated the importance of building robust risk-management systems to deal with uncertain tech outages.
The Reserve Bank of India on Thursday expressed its concerns regarding the third-party outsourcing of technological requirements for banks and financial institutions, and pressed for stakeholders in the fin sector to work towards eliminating any possibilities of cyber outages in the future.
Speaking on the Microsoft-CrowdStrike outage that occurred on July 19 and left millions across the globe without any technological assistance, disrupting important servicing the world over, RBI Governor Shaktikanta Das asked banks to stay cautious when dealing with technological support sourced by third-party companies.
"A recent global tech outage demonstrated how a minor change can wreck havoc on a global scale. It is necessary banks and financial institutions build risk management systems to control such IT issues to avoid outages that disrupt services," Das stated.
Furthermore, the RBI Governor emphasised on the importance of building robust business continuity plans to help combat any technological glitches, while stating that dependance on third-party outsourcing comes with its risks, risk that can be avoided.
"It is important to have robust business continuity plans to deal with such global outages when outsourcing data from third-party firms," Das stated.
A massive global tech failure disrupted Microsoft servers across the world on July 19, severely impacting the global workforce.
Moreover, this outage that lasted hours with no immediate reason known to understand its caused, forced crucial banking and health sectors' servers to shut down temporarily.
Aviation, fin, tech and health sectors were affected as a result of this outage, with Microsoft later revealing that its third-party outsourcing agency CrowdStrike's software update caused the servers to crash.
[The Economic Times]
