The Financial Stability Board (FSB) has published a toolkit allowing financial authorities and institutions to enhance third-party risk management and oversight.
The toolkit has been developed by the FSB’s Standing Committee on Supervisory and Regulatory Cooperation on the basis of feedback to the ‘Regulatory and Supervisory Issues Relating to Outsourcing and Third-Party Relationships’ discussion paper, published in November 2020, and a public consultation held over the summer.
Designed for financial authorities, the toolkit focuses on the oversight of financial institutions’ reliance on critical service providers. With the goal of reducing fragmentation in regulatory and supervisory approaches to third-party risk management across jurisdictions and different areas of the financial services sector, it also includes common terms and definitions on third-party risk management.
The toolkit focuses on financial institutions’ third-party risk management in light of changing industry practices and recent regulatory and supervisory approaches to operational resilience, and facilitates coordination among relevant stakeholders.
Financial institutions’ ability to manage third-party risks and financial authorities’ ability to monitor will be strengthened due to the toolkit, FSB says, as will the resilience of the financial system as a whole.and strengthen the resilience of the financial system.
