天光雲影

1.Strategic Risk
◎The third party may conduct activities on its own behalf which are inconsistent with the overall strategic goals of the regulated entity.
◎Failure to implement appropriate oversight of the outsource provider.
◎Inadequate expertise to oversee the service provider.

2.Reputation Risk
◎Poor service from third party.
◎Customer interaction is not consistent with overall standards of the regulated entity
◎Third party practices not in line with stated practices (ethical & otherwise) of regulated entity.

3. Compliance Risk
◎Privacy laws are not complied with.
◎Consumer and prudential laws not adequately complied with.
◎Outsource provider has inadequate compliance systems and controls.

4. Operational Risk
◎Technology failure.
◎Inadequate financial capacity to fulfill obligations and/or provide remedies.
◎Fraud or Error.
◎Risk that firms find it difficult/costly to undertake inspections.

5. Exit Strategy Risk
◎The risk that appropriate exit strategic are not in place. This could arise from over-reliance on the firm, the loss of relevant skills in the institutions itself preventing it bringing the activity back in-house and contracts which make a speedy exit prohibitively expense.
◎Limited ability to return services to home country due to lack of staff or loss of intellectual history.

6. Counterparty Risk
◎Inappropriate underwriting or credit assessments
◎Quality of receivables may diminish.

7. Country Risk
◎Political, social and legal climate may create add risk.
◎Business continuity planning is more complex.

8. Contractual Risk
◎Ability to enforce contract.
◎For off-shoring, choice of law is important.

9. Access Risk
◎Outsourcing arrangement hinders ability of regulated entity to provide timely data and other information to regulators.
◎Additional layer of difficulty in regulator understanding activities of the outsource provider.

10. Concentration and Systemic Risk
◎Overall industry has significant exposure to outsource provider. This concentration risk has a number of facets including:
     - Lack of control of individual firms over provider; and
     - System risk to industry as a whole.