The Financial Stability Board (FSB) released a consultation paper on third-party risk management tools for financial institutions and oversight approaches for financial authorities.
Given the reliance of financial institutions on third-party service providers and the benefits and risks of this reliance - including financial stability risks - this paper focuses primarily on the provision of critical services, i.e. those whose disruption could significantly compromise the operations of a financial institution. Taking into account evolving industry practices and recent regulatory and supervisory approaches to operational resilience, the toolkit takes a broader approach than the one envisaged for the traditional forms of outsourcing.
The main objectives of the proposed toolkit are: (i) to reduce the fragmentation of regulatory and supervisory approaches to third-party risk management, both between jurisdictions and between financial sectors; (ii) to strengthen the ability of financial institutions to manage risks from third-party service providers and from the supply chain as a whole; and (iii) to facilitate coordination, including at international level, among all stakeholders.
The FSB will hold a virtual outreach event for market operators on 21 July 2023.
More details on how to respond to the consultation and on how to register for the outreach event can be found on a dedicated page of the FSB website.
