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Abstract

In India, among the three financial regulators, RBI’s recent focus on creating a robust ICT risk management framework has been at the forefront of the country’s digital operational resilience strategy. The continuous cyber threats and recent digital operational failures have highlighted the need for further enhancements to strategies that establish strong ICT risk management. Addressing these cybersecurity vulnerabilities requires more than prescriptive rules; it demands holistic, flexible, adaptive, and coordinated regulatory approaches to strengthen digital operational resilience. This paper analyses the key issues that need resolution to advance these efforts. We identify the misalignment of economic incentives for compliance as a significant challenge in the existing framework, which leads to trust deficits and conflicts of interest within management committees. As part of our recommendations, we emphasise the need to reduce the cost of compliance, which would help align incentives and promote voluntary compliance with the regulations. Essentially, we recommend implementing cross-sectoral reforms to create a conducive environment for monitoring and enforcing compliance within financial conglomerates, thereby establishing robust and cost-effective digital operational resilience mechanisms for India’s financial system.

Digital Object Identifier (DOI)

10.55496/IOOT7707

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