Basel Committee on Banking Supervision Outsourcing Guidelines

What Are the BCBS Outsourcing Guidelines?

The Basel Committee on Banking Supervision (BCBS) outsourcing guidelines provide a framework for banks and financial institutions to manage risks associated with outsourcing activities.

As numerous countries and financial jurisdictions implement Basel Committee guidelines into their regulatory frameworks, they can apply to financial institutions globally, including in Europe, North America, Asia-Pacific, Latin America, the Middle East and Africa.  

The key principles of the BCBS guidelines include:

• Risk Management: Banks must identify, assess, and manage the risks of outsourcing, ensuring that they do not compromise the bank's ability to manage risk and comply with regulations.
• Due Diligence: Banks should conduct thorough due diligence before entering into outsourcing agreements, considering the service provider's financial stability, expertise, and compliance with legal and regulatory requirements.
• Contractual Arrangements: Outsourcing contracts should clearly define the roles and responsibilities of all parties, including performance standards, audit rights, confidentiality requirements, and termination provisions.
• Oversight and Monitoring: Banks must maintain ongoing oversight and monitoring of outsourced activities to ensure that the service provider meets contractual and regulatory obligations.
• Business Continuity: Outsourcing arrangements should not adversely affect the bank's ability to conduct business and must include plans for business continuity and disaster recovery.
• Confidentiality and Data Protection: Banks must ensure that outsourced activities comply with data protection laws and maintain the confidentiality of customer information.
• Regulatory Access: Banks must ensure that regulators have access to relevant information regarding outsourced activities, including the ability to inspect and audit service providers if necessary.
• Governance: Senior management and the board of directors should be involved in overseeing outsourcing arrangements, ensuring alignment with the bank's risk management strategy and regulatory requirements.

How Finite State Helps You Comply with the BCBS Outsourcing Guidelines

Finite State offers a comprehensive solution to support compliance with the BCBS outsourcing guidelines, helping financial institutions assess the security posture of third-party organizations

• Real-Time Threat Detection: Integrations with vulnerability databases provide up-to-date information on the latest threats and exploits, allowing for the proactive identification of potential risks before they can be exploited.
• Automate Vulnerability Identification: Using our advanced binary and source code SCA, vulnerabilities can be identified as they’re introduced across the SDLC to help teams keep applications secure.
• Comprehensive SBOM Solutions: Automatically generate Software Bill of Materials throughout the SDLC and easily compile detailed information on all components in your products, including open-source libraries, third-party dependencies, and custom code to improve transparency and identify potential security risks in your software supply chain.

Strong cybersecurity requires a collective effort. Talk to the team today to discover how Finite State can help you comply with the BCBS outsourcing guidelines.