Principles for the sound management of third-party risk

The Basel Committee on Banking Supervision has issued a consultative document proposing Principles for the sound management of third-party risk in the banking sector. The Principles address banks' increasing reliance on third-party service providers due to the ongoing digitalisation and rapid growth in financial technology. They establish a common baseline for banks and supervisors for the risk management of these arrangements. Simultaneously, they provide the necessary flexibility to accommodate evolving practices and regulatory frameworks across jurisdictions. While primarily directed at large internationally active banks and their prudential supervisors, these Principles also offer benefits to smaller banks and authorities in all jurisdictions. The Principles are intended to supersede those in the 2005 Joint Forum paper Outsourcing in financial services specifically for the banking sector.