On 14 June 2021, the Financial Stability Board (FSB) published a note which summarises the main issues raised by respondents to its discussion paper on regulatory and supervisory issues relating to outsourcing and third party relationships.

In the FSB discussion paper financial institutions and third parties were invited to provide comments on:

• The key challenges in identifying, managing and mitigating the risks relating to outsourcing and third-party relationships (including risks in sub-contractors and the broader supply chain).
• Possible ways to address these challenges and mitigate related risks, including in a cross-border context.
• Lessons learnt from COVID-19 relating to outsourcing and third-party relationships.

In relation to COVID-19 the FSB notes that most respondents did not mention significant issues with regard to financial institutions’ outsourcing or third party relationships. However, respondents also recognised that the pandemic had increased financial institutions’ dependence on technologies and services provided by third parties, which highlighted the importance of incorporating risks associated with outsourcing and third-party relationships within the scope of financial institutions’ overall (firm-wide) business continuity plans and risk management frameworks. The FSB also notes that a few public authorities observed that the categorisation of critical services at some financial institutions may need to be revisited in light of the pandemic. Some services that had been categorised as “not critical” were found to be material. In this regard, analysing the criticality of outsourced services based on different possible scenarios (including for pandemic) should be considered.