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SEBI Framework for Cloud Adoption and Protection of Sensitive Data

SEBI Framework for Cloud Adoption and Protection of Sensitive Data which may lead to financial losses if not protected

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DQC Bureau
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Cybersecurity

The Securities and Exchange Board of India (SEBI) recently introduced a Cloud adoption framework that includes data security requirements to safeguard the protection of sensitive financial data. With the growing usage of Cloud computing in the financial sector, it is critical to have adequate safeguards in place to secure sensitive information from cyber-attacks and data breaches.

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Cloud computing offers various advantages, including cost savings, scalability and accessibility. It does, however, pose some security issues, such as data leaks, illegal access and cyber-attacks. The SEBI framework for cloud adoption intends to address these concerns by establishing data security requirements that are necessary for all market intermediaries that utilize cloud services.

The requirement for encryption of all sensitive financial data transported over the cloud is one of the main requirements in the SEBI framework. Encryption is the process of turning data into a code that only authorised individuals with a decryption key can read. This helps to preserve data security and integrity, even if it is intercepted during transmission by thieves.

The framework also requires market intermediaries to ensure that their cloud service providers have adequate security measures in place, such as firewalls, intrusion detection and prevention systems, and access controls. These safeguards are intended to prevent unauthorized data access and to protect against cyber-attacks. Market intermediaries must also undertake periodic security audits on their cloud service providers to guarantee compliance with the SEBI framework.

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Furthermore, the SEBI framework necessitates the implementation of a sophisticated identity and access control system for market intermediaries' personnel and clients. This includes steps such as multi-factor authentication, password rules, and access controls to guarantee that sensitive financial data is only accessed by authorized individuals.

Another key requirement of the SEBI framework is that market intermediaries have a robust incident response strategy in place in the event of a security breach or cyber-attack. This covers detection and reporting methods, isolating damaged systems, and restoring services. Market intermediaries must also perform frequent drills and simulations to evaluate the effectiveness of their incident response strategies.

The SEBI framework also requires market intermediaries to keep a detailed audit trail of all transactions and activity that take place on the cloud platform. This aids in ensuring accountability and traceability in the event of a security incident or data breach.

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Overall, the SEBI framework for cloud adoption offers a comprehensive set of data security requirements that can aid in the safeguarding of sensitive financial data. Market intermediaries can reduce the risk of cyber-attacks and data breaches by following these principles and ensuring the security and integrity of their data. This is especially essential in the banking sector, where security breaches can result in substantial financial losses, reputational harm, and legal liabilities.

To sum it up, it is crucial to remember, however, that compliance with the SEBI framework is only the first step towards ensuring data security in the cloud. Industry must also be watchful and proactive in recognizing and mitigating security risks, such as new and emerging cyber-attacks, and adjusting their security measures in response. At this point it is safe to say that the SEBI cloud adoption framework provides a much-needed set of principles for data protection in the financial sector. Market intermediaries can protect sensitive financial data and reduce the risk of cyber-attacks and data breaches by following these principles. Nonetheless, compliance with the SEBI framework should be viewed as a starting point, and organizations should stay proactive in identifying and addressing security threats. Only then can market intermediaries be certain that their data on the cloud is secure.

--Vidhu Nautiyal, Co-Founder and CRO, CloudConnect Communication

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