Outsourcing

 

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Outsourcing

Outsourcing of aspects of a financial institution’s business to third parties, whether it be intra-group or externally, has become increasingly prevalent in recent years. There are a number of universal benefits associated with outsourcing including access to expertise and cost-efficiency. Additionally, processes, functions, or services that are critical to a core business and its continuity may be outsourced advantageously. Examples of outsourcing arrangements include control-related functions (compliance, risk management and internal audit) and IT-related services that may be provided by cloud service providers. The use of contractors entails third-party risks that are crucial to monitor and control. As a result, regulation of outsourcing in the financial sector is becoming ever more stringent, and detailed requirements are now to be specified regarding such matters as the terms under which outsourcing contracts operate, and the framework in which the ongoing relationship with a contractor should be managed and monitored.

We advise financial institutions, including fund companies, AIF managers, investment firms, and payment institutions and insurance companies with regard to their outsourcing processes. Our advice is multi-focussed and involves an initial due diligence of the contractor, a materiality assessment, negotiation and drafting of outsourcing agreements, and the processes required for appraisal and evaluation, as well as establishing an outsourcing register, and the company's internal outsourcing policy. 

Amin Bell
+46 76 135 98 00