Financial Stability Board Consultative Document FSB 622-23. Enhancing Third-Party Risk Management and Oversight: A toolkit for financial institutions and financial authorities
The FSB invited comments on the toolkit it has developed for financial authorities and financial institutions as well as service providers for their third-party risk management and oversight. The toolkit also aims to reduce fragmentation in regulatory and supervisory approaches across jurisdictions and different areas of the financial services sector, thereby helping mitigate compliance costs for both financial institutions and third-party service providers, and facilitate coordination among relevant stakeholders. Financial institutions rely on third-party service providers for a range of services, some of which support their critical operations. These dependencies have grown in recent years as part of the digitalisation of the financial services sector and can bring multiple benefits to financial institutions including flexibility, innovation and improved operational resilience. However, if not properly managed, disruption to critical services or service providers could pose risks to financial institutions and, in some cases, financial stability. The importance of cross-border supervisory cooperation and information sharing is underscored and the toolkit sets out certain ways to explore greater convergence of regulatory and supervisory frameworks around systemic third-party dependencies, options for greater cross-border information-sharing, and cross-border resilience testing and exercises.