Strengthening operational resilience - BCBS proposed principles for managing third-party risks in banking

Article

In response to the growing dependence of banks on third-party service providers and the increased risks associated with digital transformation, the Basel Committee on Banking Supervision (BCBS) has introduced a set of principles to guide the sound management of these external relationships.

Aug 23, 2024

Rosalyn Aryee, Executive Director, TPRM and Operational Resilience, Santander Corporate & Investment Bank

Strengthening operational resilience - BCBS proposed principles for managing third-party risks in banking

The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization

The Basel Committee’s new principles for third-party risk management offer a standardized framework to help banks manage the complexities and risks associated with their growing dependence on external service providers.
The principles are designed to be flexible and technology-agnostic, applicable across various technologies like AI, machine learning, and blockchain, and adaptable to the size and complexity of different banks.
Despite the BCBS’s efforts to unify third-party risk management practices, banks face challenges due to the evolving and fragmented regulatory landscape across different jurisdictions, such as the EU’s DORA and the UK’s CTP regime.
Effective third-party risk management requires continuous oversight and periodic contract reviews to ensure compliance with regulations and alignment with organizational needs, emphasizing the importance of robust governance processes.