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October 10, 2023

Navigating the MAS TRM Outsourcing Guidelines: Key Considerations for Companies

Financial institutions such as banks, insurance companies, and mortgage companies require a high level of IT infrastructure. However, as IT itself includes a vast area, many organizations find it difficult to facilitate in-house IT operations. Rather than investing in an in-house IT department, most financial institutions seek IT-related services from third-party IT solutions companies, which comes with both benefits and risks. In order to mitigate risks associated with IT-related operations and outsourcing procedures, the Monetary Authority of Singapore has introduced a set of Technology Risk Management guidelines for financial institutions and IT outsourcing companies to comply with, called the MAS TRM guidelines. 

Key Considerations for Companies when Complying with MAS TRM Guidelines 

The TRM guidelines introduced by the MAS outline the expectations and requirements that financial institutions must meet to ensure the security and resilience of their IT systems and operations. They cover a wide range of areas, including risk assessment, cybersecurity, incident management, and outsourcing. Below are the key factors that commercial entities should consider when complying with the MAS TRM guidelines. 

1. Vendor Selection 

Selecting the right vendor is the first step in stabilizing reliable IT infrastructure in a company. When making IT-related purchases such as software and hardware or partnering with a third-party IT company, financial institutions must carefully assess potential vendors to ensure that they meet the necessary security and reliability standards. Some of the key considerations when choosing a vendor are:

  1. Vendor’s Reputation: You may choose vendors who come with strong track records in providing services to financial institutions, as a clean track record speaks volumes about a company’s reliability. 

  2. OSPAR Accreditation: The Association of Banks in Singapore (ABS) has introduced a set of guidelines on Control Objectives and Procedures for outsourcing service providers across the country. To ensure that they comply with all ABS regulations, companies can undergo a third party audit and obtain an Outsourced Service Provider Audit Report (OSPAR). IT outsourcing companies that come with OSPAR accreditation are well-recognized by the MAS,  therefore, it is recommended that you select an OSPAR attested company to partner with in order to further ensure its compliance to the TRM guidelines

  3. Scalability: You need to ensure that the vendor you select can scale their services to meet your entity’s specific needs, as flexibility is essential in the dynamic world of finance. 

2. Contract Management 

Once a company selects an OSPAR-accredited, MAS-recognized service vendor, the next step is contract management. The contract you sign with your service provider must comply with the ABS and MAS TRM guidelines, and it should clearly define the roles, responsibilities, and expectations of both parties. Here’s what you need to keep in mind: 

  1. Service Level Agreements (SLAs): You may establish well-defined SLAs that specify the level of service the vendor is expected to provide, including response times for incident management.

  2. Data Handling: You need to clearly outline how data will be handled, stored, and protected by the vendor. This should align with data protection requirements under the MAS TRM guidelines.

  3. Audit Rights: You should ensure that your contract grants you the authority to audit the vendor's operations and security measures periodically. This crucial aspect ensures ongoing compliance and aligns with the requirements set forth by both ABS and MAS.

  4. Exit Strategy: It is crucial that you plan for the termination of the contract and the transition of services if needed. Your contract should outline the process and timeline for such situations.

3. Data Protection 

Protecting sensitive data is a top priority for financial institutions. MAS TRM guidelines place a strong emphasis on data protection, which is why you need to consider the below points in order to comply with them:

  1. Data Encryption: You must ensure that data transmitted and stored by your service vendor is encrypted to protect it from unauthorized access.

  2. Access Control: You should implement and regularly review strict access controls to limit who can view or obtain sensitive data. 

  3. Data Residency: It is important that you understand where your data will be stored and whether it complies with data residency requirements set forth by MAS.

  4. Incident Response: You should develop a robust incident response plan in collaboration with your vendor to swiftly address any data breaches or security incidents.

4. Contingency Planning 

Contingency planning is essential to minimize disruptions in case of unforeseen events. Below are some factors that organizations should take into consideration:

  1. Business Continuity: It is important to develop and regularly test a business continuity plan that outlines how operations will continue in the event of a disruption, such as a vendor outage.

  2. Redundancy: You should consider redundancy options for critical operational systems to ensure resilience and minimize downtime.

  3. Communication: Communication is key. Therefore, you need to establish clear lines of communication with your vendor for emergencies and ensure that both parties understand their roles in the contingency plan.


Potential Challenges Companies Can Face When Complying with MAS TRM Guidelines and the Ways to Overcome Them

Compliance with the MAS TRM guidelines can be challenging due to their complexity and evolving nature. Companies may encounter obstacles such as resource constraints, technological limitations, or resistance to change. Here are some useful strategies to address these challenges:

  1. Invest in Training: Training is an investment. You need to provide ongoing training for staff to ensure they understand the guidelines and can implement them effectively.

  2. Technology Upgrades: Technology evolves rapidly. Therefore, you should keep an eye out for technology upgrades and allocate the necessary resources to meet compliance requirements.

  3. Risk Assessment: Certain technologies come with inherent risks. Hence, it is crucial that you conduct regular risk assessments to identify vulnerabilities and proactively address them.

  4. Collaboration: Sharing knowledge and technology is a good way to stay on track. It is recommended that organizations collaborate with industry peers and regulatory bodies to stay updated on best practices and regulatory changes.


NEX CorporateIT: Your Trusted IT Services Provider 

Coming with years of experience under our belt, we provide excellent IT solutions and all other support services to institutions and organizations that are unable to maintain their own IT infrastructure facilities. Financial institutions are part of our valued clientele, and our strict compliance with MAS TRM guidelines and other government regulations is what makes us a top choice for them. If you are searching for a reliable IT partner to take your business operations to the next level, click here to visit our website and learn more about what we offer!