The Australian Prudential and Regulation Authority (APRA) announced today that it has taken action against Medibank Private following an APRA review of its major cyber incident in October 2022.
Following APRA’s examination of the matters relating to the incident, APRA will impose an increase in Medibank’s capital adequacy requirement of $250 million, reflecting weaknesses identified in Medibank’s information security environment.
The capital adjustment, effective from 1 July 2023, will be applied to Medibank’s operational risk charge under the new Private Health Insurance (PHI) Capital Framework. It will remain in place until an agreed remediation program of work is completed by Medibank to APRA’s satisfaction. APRA will also conduct a targeted technology review of Medibank, with a particular focus on governance and risk culture.
APRA notes that while Medibank has already addressed the specific control weaknesses which permitted unauthorised access to its systems, it still has further work to do across a number of areas to further strengthen its security environment and data management.
APRA Member Suzanne Smith said the October 2022 cyber incident affecting Medibank customers was one of the most significant data breaches ever experienced in Australia.
“In taking this action, APRA seeks to ensure that Medibank expedites its remediation program,” Ms Smith said.
“This action demonstrates how seriously APRA takes entities’ obligations in relation to cyber risk and that APRA will respond strongly to identified weaknesses in cyber security controls.
“As noted previously, APRA expects Medibank to ensure there is appropriate accountability and consequence management, including impacts to executive remuneration where appropriate. I note that Medibank has consistently dealt with APRA in an open, constructive and cooperative way, consistent with our expectation of all regulated entities.
“Since launching the 2020-2024 Cyber Security Strategy1 APRA has repeatedly stressed the importance of an uplift in cyber security and continued vigilance to identify and address cyber exposures. Unfortunately, not all entities are heeding these messages as we continue to identify poor cyber security practices and inadequate oversight from boards and management,” Ms Smith said.
Where appropriate, APRA will take further action to ensure entities address gaps and weakness in controls.
1 Executive Board Member Geoff Summerhayes - speech to Financial Services Assurance Forum.