Central Bank publishes Cross-Sectoral Outsourcing Discussion Paper

On 19 November 2018, the Central Bank of Ireland (the “Central Bank”) published a discussion paper entitled “Outsourcing – Findings and Issues for Discussion” (the “Discussion Paper”) containing a summary of key issues and risks identified by the Central Bank requiring prompt attention by industry. The closing date for submission of responses to questions posed in the Discussion Paper is 18 January 2019.

The findings in the Discussion Paper are underpinned by both the Central Bank’s supervisory engagements with industry along with responses received from a recent cross-sectoral outsourcing survey (completed by 18 banks, 82 asset management sector firms, 83 insurers and 2 payment institutions).

In its announcement of the publication of the Discussion Paper, the Central Bank noted it has observed:

  • a significant increase in reliance on outsourcing of activities (both on an intragroup and third party basis) by regulated financial service providers;
  • serious deficiencies in board awareness and understanding of the extent of reliance on outsourcing; and
  • major weaknesses in relation to risk management controls and processes, and business continuity planning around outsourcing.
The Central Bank expects all regulated financial service providers to review their current practices against the Discussion Paper.

 

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