The Central Bank of Nigeria (CBN) has unveiled a Risk and Information Security Management Framework.
Following an update on the CBN website, the policy is aimed at promoting effective management of monetary policy and banking supervision and to guide the management of risks associated with the payment system in Nigeria.
It stated that the objective of the framework was to identify and address sources of systemic risks within the Nigerian Payments System landscape; establish sound governance arrangements to oversee the risk management framework by ensuring that risks are identified, monitored and treated.”
“Establish clear and appropriate rules and procedures to carry out the risk- management objectives, employ the resources necessary to achieve the payments system’s risk management objectives; and integrate risk management into the decision-making processes of the Scheme Boards and Working Groups under PSV 2020.”
Furthermore, it added that the scope was designed to guide the operators and users of the payment systems across Nigeria.
The scope of the framework also includes any payment system based or operated in Nigeria that engages in the settlement of non-Naira transactions operating within Nigeria and those that operate across the Nigerian borders, either cross border payment systems; along with their infrastructure providers and the Payment Service Providers (PSPs) that make up these systems.
In addition, it noted; “This framework does not apply to arrangements for the physical movement of cash or systems for settling securities nor apply to market infrastructures such as trading exchanges, trade-execution facilities, or multilateral trade-compression systems.
“It is also not intended to apply to bilateral payment, clearing, or settlement relationships, where a payment system is not involved, between financial institutions and their customers, such as traditional correspondent banking and government securities clearing services.
“For example, the orderly settlement of open market operations (OMO) and the efficient movement of funds throughout the financial system via the financial markets and the payments system that support those markets are critical to the effective implementation of monetary policy.
“Similarly, supervisory objectives must take into account the risks that payment systems pose to the financial system by participating directly or indirectly in, or providing settlement, custody, or credit services.
“In the interconnected environment, the safety and efficiency of these systems may affect the stability and soundness of financial institutions and consequently the financial stability of the country.
The statement further explains; “As a result, safeguarding the integrity of the payments system in Nigeria has acquired additional significance and calls for the upgrading of associated risk management procedures through concerted efforts by market participants and the relevant authorities, notably the CBN.