Complex Sub-outsourcing (Subcontracting) Chain Risk

The risk that long and complex sub-outsourcing chains reduce the ability of outsourcing organizations to oversee outsourced critical or important functions and the ability of competent authorities (jurisdiction-specific regulators) to effectively supervise them. The proportionality principle aims to ensure that governance, including that related to outsourcing, is consistent with the individual risk profile, the nature and business model of the institution and the scale and complexity of their activities, so that the objectives of the regulatory requirements are effectively achieved. Adapted from EBA Outsourcing Arrangements 2019.