Proposed Interagency Guidance on Third-Party Relationships: Risk Management
This tool summarizes the recently proposed interagency guidelines designed to help banks manage risks associated with third party relationships. The following are they key takeaways from the guidelines:
- Banks need to have processes in place to evaluate third-party risks prior to entering into outside relationships.
- Ongoing monitoring is an essential component of risk management which should occur throughout the duration of a third-party relationship. The Board of Directors and Management are each responsible for oversight and accountability.
- All processes involved in the undertaking and continuation of third-party relationships must have adequate controls in place that are commensurate with the level of risks assumed by the bank.
- Examiners may consider a bank’s failure to have effective third-party risk management processes to be an unsafe or unsound practice.
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