FSB launches toolkit to enhance third-party risk management and oversight

The Financial Stability Board launched a toolkit designed for financial authorities, institutions and service providers to enhance their management and supervision of third-party risks.

The primary goal of the toolkit is to minimize regulatory and supervisory inconsistencies across various jurisdictions and sectors within the financial services industry. By doing so, it seeks to alleviate compliance expenses for both financial institutions and third-party service providers while promoting better coordination among key stakeholders.

The toolkit consists of four primary chapters:

• Chapter one establishes a foundational list of common terms and definitions.
• Chapter two provides a summary of the toolkit's approach.
• Chapter three offers tools to assist financial institutions in identifying essential services and handling potential risks throughout the lifecycle of third-party service relationships.
• Chapter four outlines the current and evolving approaches and tools employed by financial authorities to supervise how financial institutions handle third-party risks, along with strategies for identifying and managing systemic third-party dependencies and potential systemic risks.

The toolkit can be found at www.fsb.org/publications.