Featured Product

    FSB Consults on Issues on Outsourcing and Third-Party Relationships

    November 09, 2020

    FSB published a discussion paper on the regulatory and supervisory issues related to outsourcing and third-party relationships. The discussion paper presents an overview of the evolving regulatory and supervisory landscape for outsourcing and third-party risk management in FSB member jurisdictions. It briefly describes the existing regulatory and supervisory approaches and outlines the common regulatory and supervisory challenges associated with outsourcing and third-party risk management, also identifying key issues for further exploration. FSB is seeking comments, by January 08, 2021, on the questions set out in the discussion paper.

    In January-March 2020, the FSB Standing Committee on Supervisory and Regulatory Cooperation (SRC) conducted a survey among member jurisdictions on the existing regulatory and supervisory landscape for outsourcing and third-party risk management, including cross-border supervisory challenges and potential financial stability issues. The discussion paper provides a high-level overview of the existing landscape based on the survey findings as well as the preliminary observations from authorities’ and financial institutions’ recent responses to the COVID-19 pandemic. The paper intends to facilitate and inform discussions among authorities, financial institutions, and third parties on how to address the issues identified in the SRC survey and the 2019 FSB report on third-party dependencies in cloud services. The discussion has highlighted the following key challenges faced by supervisory authorities:

    • Practical limitations on the ability to ensure that financial institutions appropriately manage the risks in their outsourcing and third-party agreements (including risks in the third party’s wider supply chain)
    • Limitations on their ability to effectively oversee supervised financial institutions’ outsourcing and third-party arrangements in a cross-border context
    • Challenges in identifying, monitoring, and managing potential systemic risks related to financial institutions’ use of outsourcing and third-party arrangements, particularly, due to concentration in the provision of third-party services and lack of relevant information

    The high pace of evolution of third-party relationships, including where and how financial institutions use third-party providers, can make understanding and managing these risks more complex. In the paper, FSB highlights that additional analysis may be considered to better understand the risks posed by the changing landscape of outsourcing and third-party relationships. The additional analysis may also be considered to better understand whether the existing approaches allow financial institutions to capture the benefits of outsourcing and third-party relationships while sufficiently addressing the risks that these relationships may pose to financial institutions. The discussion paper emphasizes that effective cross-border cooperation and dialog among supervisory authorities as well as the effective application of existing standards and other emerging practices are important to address these challenges and risks.

     

    Related Links

    Comment Due Date: January 08, 2021

    Keywords: International, Banking, Insurance, Securities, COVID-19, Third-Party Risk, Systemic Risk, Outsourcing Risk, Cloud Computing, FSB

    Featured Experts
    Related Articles
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7875