Rodríguez Angobaldo Abogados | View firm profile
Financial regulation across Latin America has been experiencing an accelerated transformation, directed towards enhancing institutional responsiveness to emerging risks characteristic of the digital ecosystem.
This phenomenon—although expressed with specific regulatory nuances in each jurisdiction—shares a common thread: financial supervisors are raising standards of market conduct, transparency, and service continuity, while introducing increasingly stringent operational requirements for incident management, particularly those related to cybersecurity and information security.
In practice, this means that the institutional response to high‑impact operational events has ceased to be a discretionary matter of management or reputation, but has instead become an enforceable component of regulatory compliance. Financial institutions are therefore required to strengthen their internal capacities to identify, classify, contain, and communicate incidents in a timely manner, under parameters designed to establish legal certainty regarding the standard of diligence expected in crisis scenarios.
The sustained growth of digital channels in financial services, together with the technological dependence of financial services users, has increased the volume of operations and, consequently, the risk that an incident—whether caused by an external attack, internal vulnerability, or availability failure—may result in direct impacts on both users and system participants. The mass dissemination of information through digital channels tends to amplify the reputational effect of such incidents, generating disproportionate noise even in relation to events that are not yet confirmed or still under investigation.
The rapid spread of incomplete versions, the replication of unverified content, and the viral circulation of isolated testimonies can trigger perceptions of systemic risk and lead to reactive decisions by users (withdrawals, blockages, mass claims), thereby increasing the legal and operational exposure of the institution. As a result, authorities no longer assess solely the institution’s ability to “resolve” the technical problem, but also its ability to manage the broader impact of the event, including the informational dimension and the institutional response to an incident.
Indeed, regional regulation has shown a tendency to migrate towards a compliance model based on institutional capacities: response protocols, defined roles, clear deadlines, traceable communication mechanisms, and a preventive approach supported by risk management. In practice, this has meant that an incident is no longer regarded solely as a technological event, but as a transversal regulatory matter, with the potential simultaneous activation of obligations before: (i) financial supervisors; (ii) consumer protection authorities; and, (iii) in many countries, data protection authorities.
One of the most significant changes in the region is the progressive standardisation of communication duties in relation to major incidents. Various jurisdictions have been incorporating, with differing levels of detail, parameters that distinguish between (a) direct communications to the affected client; and, (b) mass or general communications when the nature of the event reaches a threshold of systemic, reputational, or broad potential impact.
The technical dimension of these obligations does not reside solely in “informing”, but in the manner, timing, and audience of such communication.
Another significant issue in the region concerns the effect of these obligations on the managerial freedom of financial institutions. Although the adoption of internal protocols belongs to the organisational domain, regulators have increasingly introduced measures that curtail discretion in critical areas, under the rationale that effective incident management has become both a prudential and market‑conduct duty, inseparable from the stability of the business.
Nonetheless, the challenge manifests as a specific operational tension: the obligation to promptly communicate can clash with the necessity of technically verifying the actual extent of the incident, preventing premature conclusions, and avoiding the release of statements that might subsequently require amendment.
When an incident occurs, institutions are immediately confronted with (i) a dynamic technical scenario (origin, scope, impacted users, persistence of risk); (ii) reputational pressure intensified by social media and traditional outlets; and, (iii) legal risks stemming from subsequent regulatory interpretations of whether the response was “timely” and “adequate”. Within this framework, regulation that restricts discretion has a dual effect: it enforces compliance with an objective minimum standard, yet diminishes the flexibility to determine the timing and substance of communication with the certainty ordinarily required by a complete technical investigation.
It is fundamental to examine the impact of these requirements on corporate management autonomy, which must be regarded as a mechanism for protecting the financial infrastructure and securing the sustainability of business within an ever more digital and regulated market.