Central Bank of Ireland – Report on Outsourcing
The Report sets out the CBI's main findings from its review of regulated firms' outsourcing activities and outlines the CBI's minimum supervisory expectations arising from those findings. The Report identifies several areas of weakness in firms' management of outsourcing arrangements and outlines the specific actions that it expects firms to take to address these

 

On 19 November 2018, the Central Bank of Ireland (CBI) published a report on outsourcing by regulated firms across different segments of the financial services sector (the Report).

The Report sets out the CBI's main findings from its review of regulated firms' outsourcing activities and outlines the CBI's minimum supervisory expectations arising from those findings. The Report identifies several areas of weakness in firms' management of outsourcing arrangements and outlines the specific actions that it expects firms to take to address these. The three key areas of weakness and related expectations and as follows:

  • Governance — boards and senior managers must increase their degree of operational oversight over outsourcing arrangements;
  • Risk management — improvements in the identification and active management of outsourcing risks are required; and
  • Business continuity management — firms must be in a position to transfer or bring outsourced services 'in-house' if required.

The Report also highlights current outsourcing trends and corresponding risks that arise for regulated firms as a result of particular outsourced activities. Outsourcing to cloud service providers (CSPs), amongst others, is identified as an emerging trend that gives rise to a specific set of challenges that the CBI expects firms to address and mitigate against, including managing data protection, location, concentration, systemic and security risks. 

The Report concludes that the results of the CBI's review into outsourcing are "disappointing" and that the CBI expects that regulated firms will take immediate action to remedy the significant weaknesses in firms' management of outsourcing arrangements identified in the Report. The Report communicates the CBI's minimum supervisory expectations and reaffirms the CBI's commitment to increasing regulatory inspections and oversight in this area. 

CBI Outsourcing

For further information, read our full briefing on the Report here.

 

 

 

 

 

 

 

 

Contributed by: Shane Kelleher

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