- The Basel Committee has published principles for the sound management of third-party risk in the banking sector.
- The principles establish a common baseline for banks and supervisors for the sound management of third-party risk.
- The Committee will continue to monitor developments related to the digitalisation of finance and financial technology from a prudential perspective.
The ongoing digitalisation of finance has led to a rapid adoption of innovative approaches, which has increased banks’ dependency on third-party service providers for services that banks had previously not undertaken. In response, the Basel Committee has developed a new set of principles to reflect a larger and more diverse third-party service provider environment in the banking sector.
Building on the outcome of the previous consultation process, the principles establish a common baseline for banks and supervisors for the risk management of third-party service provider arrangements. At the same time, the principles maintain sufficient flexibility to accommodate evolving practices and regulatory frameworks across jurisdictions. The principles supersede those in the 2005 Joint Forum paper Outsourcing in financial services specifically for the banking sector.
The Committee will continue to monitor developments related to the digitalisation of finance and financial technology from a prudential perspective.
Note to editors:
The Basel Committee is the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. The Committee reports to the Group of Central Bank Governors and Heads of Supervision and seeks its endorsement for major decisions. The Committee has no formal supranational authority, and its decisions have no legal force. Rather, the Committee relies on its members’ commitments to achieve its mandate. The Group of Central Bank Governors and Heads of Supervision is chaired by Tiff Macklem, Governor of the Bank of Canada. The Basel Committee is chaired by Erik Thedéen, Governor of the Sveriges Riksbank.
More information about the Basel Committee is available here.