In a bid to guide the management of risks related to making payments in the country, the Central Bank of Nigeria (CBN) has released the Nigerian Payment System Risk and Information Security Management Framework.
The framework was released yesterday 6th January 2020, is expected to provide answers to several concerns of stakeholders.
Why it matters: It is meant to address systemic risks, credit risks, liquidity risks, operational risks, compliance, legal and regulatory risks, settlement risks and information security risks. The framework will help identify and tackle the sources of systemic risks within the payment ecosystem in the country.
The new guidelines will also be expected to 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. It employs the resources necessary to achieve the payments system and to integrate risk management into the decision making processes.
The Central Bank stated that the framework would guide the operators and users of the payment systems across the country but it 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.
Meanwhile, explaining why the Nigerian Payment System Risk and Information Security Management Framework is imperative, the CBN disclosed that the rapid growth in the volume and value of financial transactions call for the initiative.
it added that the transactions represents an important source of revenue for the providers of payment services particularly banks and therefore altering significantly the risks associated with the payment and settlement of transactions.
The apex bank also said the risk associated with the payment system might increase, shift, concentrate, or transform risks in unanticipated ways. The failure of one or more of the participants in a payment system to settle their payments would be catastrophic and would undermine the public confidence in the nation’s financial system