Managing The Risks of Outsourcing in Financial Services

Outsourcing can cut costs and improve the quality of non-core functions. But it can also transfer risk beyond your control.

Hidden fees, vendor solvency and data security are just some of the most common problems. Service providers may also have governance issues, landing you in hot water with the regulator.

The FCA considers your firm accountable. Though the work may be outsourced, regulatory responsibilities remain firmly in-house.

Introducing the right processes is an essential part of managing third-party risk. From Service Level Agreements (SLAs) to termination contracts, the right documentation will safeguard your business and demonstrate best practice to the regulator.

Mitigate outsourcing risk, without losing the benefits

Outsourcing arrangements can become complex. But proper management of third-party services can slash your internal operating costs and boost efficiency. This course helps you get the right systems and processes in place to take full advantage.

Maximise the benefit of outsourcing – Gain a greater appreciation for the importance of watertight documentation that’s linked to outcomes. By tying incentives to performance you’ll get the best possible result from outsourcing.

Draw up resilient contingency plans – It’s essential to prepare for worst-case scenarios. You’ll gather concrete examples from case studies to better understand the contingency plans you (and the provider) need to avoid business disruption.

Develop processes that promote quality – A strong outsourcing framework will let you monitor the performance of service providers at every stage of the job. You’ll demonstrate your strength of oversight to the regulator, while ensuring quality.

Establish trusted, transparent relationships – Become better at communicating your expectations to service providers. If you’re both on the same page, you’ll be able to evidence good management to the regulator and enjoy better working relationships.

The Course Agenda

An introduction to outsourcing

• Understanding the key business drivers
• An overview of regulatory requirements for control and monitoring
• Assessing the materiality of arrangements

New arrangements and service level agreements (SLAs)

• Identifying the regulatory requirements for new contracts
• The importance of SLAs and common pitfalls when drawing them up
• Exercise: Designing an appropriate SLA framework

Governance frameworks and good relationship management

• How to evidence good monitoring and management to the regulator
• The role of Management Information in ensuring quality of service
• Developing outsourcing policies
• How to approach multiple outsourcing arrangements
• Intergroup outsourcing

Managing risk in outsourcing arrangements

• Identifying outsourcing risks
• Understanding controls and how the environment differs for outsourcing arrangements
• Special considerations for offshore arrangements
• Case study exercise: Designing effective controls

Successful termination of contracts

• Meeting regulatory requirements for contract termination
• The importance of exit planning
• How to mitigate risk during the exit process