The Interagency Guidance on Third-Party Relationships: Risk Management, establishes the expectation for banking organizations of all sizes to effectively manage risks related to their third party relationships, with great scrutiny required when related to critical third parties. It covers key aspects throughout the entire life cycle of third-party relationships and identifies oversight of financial condition as an important factor in bank risk management.
The guidance is for banks and financial institutions including national banks, federal savings associations, covered savings associations and federal branches and agencies of foreign banking organizations.
How to comply with requirements for measuring financial condition of critical third-parties, which is listed prominently as an important risk that banks are expected to manage.
How to identify a list of critical third-parties and adopt appropriate risk management processes to mitigate risk of disruption.
How to implement ongoing financial oversight that spans initial due diligence for critical third-parties to consistent ongoing monitoring and meets regulatory requirements.
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