What CPS 230 Means for Your Supply Chain Security

Published On: July 2nd, 2025Categories: Governance, Risk & Compliance: GRC, Regulatory Change2.2 min read

The Australian Prudential Regulation Authority’s (APRA) CPS 230 mandates critical supply chain risk management updates. Financial institutions reliant on third-party services must pay close attention to this mandate. Why? Supply chain security breaches remain a critical issue, actually now affecting over 75% of software supply chains and involving recent high-profile incidents.  

cps 230 supply chain

CPS 230 therefore aims to act as a shield to better safeguard organizations.

To make this happen, CPS 230 is designed to enforce rigorous third-party risk management, business continuity, and operational resilience standards. 

Two Important Terms to Familiarize Yourself With: Step-In Risks and Contagion Risks 

Under APRA CPS 230, organizations must account for both step-in and contagion risks within their supply chain management strategies: 

  • Step-In Risk: In cases where a critical supplier fails, organizations may need to “step in” to directly manage or take over the service. This intervention ensures essential operations continue uninterrupted. 
  • Contagion Risk: Issues originating from one supplier can cascade through related areas, potentially impacting other business functions or connected providers. These issues can pose a broader threat to operational stability. 

APRA’s focus on addressing these risks reinforces the need for robust contingency and monitoring plans that can preemptively mitigate these disruptions. In the end, it’s about better safeguarding critical services across the organization. 

What Does CPS 230 Focus on? Five Things to Know 

  1. Dynamic Supplier Oversight: CPS 230 emphasizes maintaining a living register of material service providers (MSPs) to ensure ongoing oversight of critical suppliers. This register must be submitted annually to APRA, keeping entities accountable for their risk management practices.
  2. Rigorous Due Diligence: Entities must evaluate potential risks from MSPs. This includes operational and cybersecurity vulnerabilities. They must also document these assessments meticulously.
  3. Service Level Agreements (SLAs): Clear SLAs with MSPs are crucial. They define rights, responsibilities, and termination protocols. And they ensure operational continuity.
  4. Proactive Monitoring: Ongoing supplier monitoring is required. This work involves conducting regular performance and risk evaluations, reporting to senior management, and preparing contingency plans to mitigate disruptions.
  5. Technology Integration: Specialized risk management tools can streamline risk assessment, vendor monitoring, and compliance. They can also facilitate proactive risk management within an integrated GRC framework.

What Must Organizations Do Next to Strengthen and Protect Their Supply Chains? 

Firms need to ensure alignment with CPS 230 requirements. This alignment will bolster resilience and agility across their vendor ecosystems. It will also drive more sustainable and secure growth. 

Ultimately, CPS 230’s enhanced regulatory approach underscores the need for a proactive, technology-driven strategy for supply chain risk management. 

For additional information on CPS 230, see our related whitepaper: APRA CPS 230: Leveraging Technology for Proactive Supply Chain Risk Management.