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Partners in Risk & Capital Management

Outsourcing Management

Outsourcing Risk Management and Outsourcing Governance

Outsourcing of activities and processes is part of the operational structures present in financial institutions to deliver services to clients. As control over individual processes that are integrated into the larger framework of the institution is given to a service provider outside of management’s immediate control, additional risks arise. Among others, such risks may manifest in a service provider’s poor performance or non-compliance for which the contracting organisations may be liable.

Regulatory requirements put further pressure on financial institutions to monitor and manage risks arising from outsourcing activities. However, even in the absence of regulatory pressures, an appropriate risk awareness as well as an efficient and adequate control system to reduce outsourcing risks or to avoid their emergence to begin with, i.e. an appropriate outsourcing governance, are in the best interest of an organisation.

Our Approach

We support our clients in all aspects of outsourcing management:

  • Identification of gaps between the institution’s / group’s status quo and current regulatory requirements
  • Determination of necessary measures to ensure compliance
  • Creation of decision tools to identify business relationships as outsourcing
  • Development of client specific measures of outsourcing risk as well as instruments to manage and control outsourced services
  • Conception of governance structures fostering ensuring both compliance as well as the efficiency of the outsourcing management process
  • Accompanying the implementation of measures, concepts, etc. to ensure an optimal transition between project result and day to day business

Our Experience

  • Creating tools to guide the classification of outsourcings versus other external procurements and to assess an outsourcing’s inherent risk leading to an evaluation of its materiality
  • Designing governance and operational structures ensuring an efficient 3 lines of defence model
  • Developing an outsourcing strategy in line with the customer’s overall risk and business strategies
  • Scrutinizing outsourcing contracts for gaps versus internal and external requirements
  • Conceptualizing the 2nd line’s control function in consideration the organisation’s capacity
  • Long-term operational assistance of a specialized second line function for an institution’s outsourcing management