Singapore, 12 March 2004...The Monetary Authority of Singapore (MAS) today released a consultation paper on the guidelines on outsourcing. These guidelines set out MAS' expectations for financial institutions that have entered into outsourcing arrangements or are planning to outsource one or more of their business activities to a service provider in Singapore or elsewhere.
The main focus of the guidelines is on material outsourcing, that is where a financial institution enters into an outsourcing arrangement that, if disrupted, has the potential to significantly impact its business operations, reputation or profitability.
The proposed guidelines provide guidance to the industry on sound and responsive risk management practices for outsourcing. They are based on a review of international good practice. They have been developed in response to requests from financial institutions for MAS' views about their proposed outsourcing arrangements. The guidelines complement the Internet Banking Technology Risk Management Guidelines, released in June 2003, which address outsourcing of IT processing functions and processes.
The release of the guidelines reflects MAS' continuing efforts to introduce sound risk management principles and practices for financial institutions. In assessing the quality of an institution's risk management systems, MAS will consider the extent to which the institution applies the guidelines. MAS expects financial institutions to establish risk management practices commensurate with the risks posed by outsourcing arrangements. Ultimate responsibility and accountability for outsourcing rests with the financial institution, its board of directors and management.
MAS seeks comments on the proposals in the consultation paper, which broadly set out:-
application of the guidelines;
definition of material outsourcing; and
risk management practices relating to outsourcing.