Strengthening Supplier Contracts for CPS230 Compliance

APRA’s CPS230 places significant emphasis on the resilience of supplier relationships. Central to this is the role of supplier contracts, which must evolve from simple transactional agreements to detailed frameworks for managing risk, ensuring operational resilience, and meeting compliance standards.

Supplier contracts under CPS230 should address more than price and service delivery. They must integrate clauses that clarify expectations during disruptions, define accountability, and outline recovery procedures. Organisations need to balance flexibility with enforceability to maintain service continuity while meeting regulatory demands.

Key Areas to Focus On:

1. Resilience Clauses: Include specific terms on Business Continuity Planning (BCP), recovery objectives and incident reporting.
2. Termination and Transition: Define clear exit strategies and Material Service Provider (MSP) contingency and disengagement plans to avoid operational disruptions during transitions.
3. Performance Metrics: Embed KPIs and SLAs that align with resilience goals, ensuring suppliers contribute to operational stability.
4. Fourth Parties Disclosure: Require notification by the service provider of any use of other MSPs that it materially relies upon to deliver the service.

Takeaways for Risk and Legal Professionals:

1. Audit Existing Contracts: Identify gaps in resilience and compliance language.
2. Engage Legal Experts: Collaborate to draft terms that meet CPS230 while safeguarding organisational interests.
3. Monitor Compliance: Implement tools to continuously assess supplier adherence to contractual obligations.

How Ethika Can Help:‍

Ethika’s AI driven solutions streamline contract reviews, identify critical gaps, and provide clause recommendations for alignment with CPS230 minimum requirements for service provider agreements. Our advisory services help legal professionals implement contracts that protect operations and compliance with confidence. By giving each contract and policy a compliance score, our AI driven advisory helps you prioritise your workload. Regulatory compliance doesn’t need to be a cumbersome and resource-draining process. With Ethika, it’s streamlined and proactive with the right tools and expertise.