In addition to traditional core bank processing and information technology services, financial institutions1 outsource operational activities such as accounting, appraisal management, internal audit, human resources, sales and marketing, loan review, asset and wealth management, procurement, and loan servicing. The Federal Reserve is issuing this guidance to financial institutions to highlight the potential risks arising from the use of service providers and to describe the elements of an appropriate service provider risk management program. This guidance supplements existing guidance on technology service provider (TSP) risk,2 and applies to service provider relationships where business functions or activities are outsourced. For purposes of this guidance, “service providers” is broadly defined to include all entities3 that have entered into a contractual relationship with a financial institution to provide business functions or activities.

 

Contributors: Federal Reserve Board
Categories: Whitepaper
SRC Type: Outsourcing, Risk Management, Risk Management Outsourcing (RMO), Sourcing Management