Outsourcing and third party risk management

Outsourcing and Third Party Risk Management (‘TPRM’) has become one of the key areas of focus for financial services organisations. In the latest global KPMG Third Party Risk Management Outlook survey, over 75 percent of respondents stated that TPRM was a strategic priority for their business.

This is reflective of the rapidly changing landscape the industry finds itself in; more than ever before companies are using third parties to deliver technology-driven services to customers, migrating to cloud-based solutions and transform their business.

Businesses are encountering challenges in the effective management of third party risks

Insufficient resources and capabilities to manage all the third-party risks they face, against a backdrop of evolving risks and threats
Inconsistent and ineffective approaches to identifying and managing risks across the lifecycle of a relationship or service
Failure to harness the automation benefits from using technology and data for decisioning, monitoring and workflow
Sustaining a complex operating model that spans multiple parts of the business

In the UK, the Prudential Regulation Authority (‘PRA’) published its Policy and Supervisory Statements on Outsourcing and Third Party Risk Management on 29th March 2021, which modernises the PRA’s expectations on how firms should manage outsourcing and third party risks.

Following the publication, on Wednesday the 7th of April KPMG hosted a webinar together with the regulators to discuss what the new regulatory requirements mean for the financial services industry. This webinar covered the key regulatory requirements, insights, critical actions to be taken, and the potential challenges for the 500+ clients in attendance.

To assist clients in building a resilient supply chain and navigating these new extensive requirements for third party risk management, KPMG’s paper summarises the PRA’s Policy and the Supervisory Statement, and provides practical actions for clients to take.

To read in detail, please download our latest report.