A Leader's Guide to the SC's Technology Risk Management (TRM) Framework
Understand your board's key responsibilities under the latest SC Technology Risk Management (TRM) framework. AKATI Sekurity explains your duties and how an independent review helps you achieve full compliance and strategic advantage.
For leaders in Malaysia's capital markets, the landscape of regulation is constantly evolving. With the Securities Commission's (SC) revised Guidelines on Technology Risk Management now in effect as of August 19, 2024, understanding your specific obligations has never been more critical.
While the full document is comprehensive, its core message for business leaders is about strategic oversight and accountability. This guide breaks down what the SC-TRM framework means for you and your board, explaining your responsibilities in plain English and showing how to transform this regulatory requirement into a powerful tool for your business.
What is the SC-TRM Framework and Why Does It Matter?
Issued by the Securities Commission Malaysia under the Capital Markets and Services Act 2007 , these guidelines create a new, comprehensive framework for managing technology-related risks. They officially supersede and replace the previous Guidelines on the Management of Cyber Risk (GMCR).
Who does it apply to? These guidelines apply to all capital market entities, including stock exchanges, clearing houses, Capital Markets Services License (CMSL) holders, and other registered persons.
What is its purpose? In an era where technology drives every aspect of the capital markets, technology risk is now one of the most significant business risks. The SC’s goal is to ensure every market entity has a robust framework to protect its operations, its clients, and the stability of the market itself. This goes beyond just IT; it covers governance, operations, third-party providers, and cybersecurity management.
A Board's Top Responsibilities Under the New Guidelines
The SC places ultimate responsibility for technology risk oversight squarely on the board of directors. While your technology teams will handle the day-to-day implementation, the board is accountable for ensuring the right framework is in place. Here are your key duties:
1. Approve the Framework and Set the Tone: The board must personally approve the company’s overall TRM Framework, its policies, and the official risk appetite statement. This means you are responsible for defining how much risk the organization is willing to accept to achieve its objectives.
2. Provide Sufficient Resources: You must ensure that adequate resources are allocated to manage technology risk effectively. This includes appointing at least one responsible person from senior management to oversee the day-to-day management and implementation of the cyber security strategy.
3. Oversee Third-Party and Outsourcing Risk: If your company uses third-party technology providers—especially for cloud services—the board is accountable for the effectiveness of these arrangements. You must ensure proper due diligence and risk management are applied to all vendors.
4. Stay Informed and Ensure Regular Reviews: The board has a duty to stay up-to-date on new and emerging technology threats. You must also ensure that the TRM Framework is reviewed at least every three years, and its supporting policies are reviewed annually.
How an Independent Review Helps You Fulfill These Duties
With these significant responsibilities, how can a board be confident that its framework is truly effective and compliant? An independent review is the most direct and reliable way to get that assurance.
The SC guidelines require regular technology audits and even state that the SC may appoint an independent party to perform a review at the entity’s expense. Being proactive by commissioning your own independent review is a hallmark of good governance.
Here is how it directly helps the board meet its obligations:
Objective Validation: An independent review provides an unbiased, expert opinion on the effectiveness of your risk management, governance, and internal controls. This gives the board the credible validation needed to confidently approve the TRM framework and its policies.
Strategic Insight: The review identifies not just gaps, but also opportunities for improvement. This allows the board to allocate resources more effectively, investing in areas that have the greatest impact on reducing risk.
Vendor Accountability: The process assesses your third-party arrangements, helping you oversee outsourcing risk and ensuring your technology service providers meet the SC's stringent requirements.
Clarity and Confidence: Ultimately, the review translates complex technical issues into clear business terms. It provides the board with the clarity needed to stay informed and make strategic decisions with confidence.
From a Regulatory Burden to a Strategic Tool
The SC-TRM framework is more than a list of rules; it’s a blueprint for building a resilient, modern financial institution. By embracing your oversight role and leveraging an independent review, you can turn this compliance mandate into a clear path for improvement, stronger governance, and a distinct competitive advantage.
Ensure your board is meeting its obligations under the new SC guidelines. Discover how AKATI Sekurity's expert-led SC Technology Risk Management Independent Review provides the clarity and assurance you need.
