Financial Stability Board releases third-party risk management toolkit

The Financial Stability Board today released a guide for financial institutions and regulators on enhancing third-party risk management and oversight. The FSB “toolkit” seeks to reduce fragmentation in regulatory and supervisory approaches across jurisdictions and different areas of the financial services sector, “thereby helping mitigate compliance costs for both financial institutions and third-party service providers, and facilitate coordination among relevant stakeholders,” according to the FSB.

The guide lists common terms and definitions regarding third-party risk management. It provides tools to help financial institutions identify critical third-party services and manage potential risks throughout the lifecycle of a third-party service relationship, including risks from service providers’ supply chains. It also suggests regulatory tools for supervising how financial institutions manage third-party risks.