The FSA’s (now FCA) 2012 ‘Dear CEO’ letter on asset management industry outsourcing sparked activity on resilience risk management.
After the review the FCA acknowledged progress but warned firms their controls and contingencies needed further strengthening and would continue to be monitored.
Our client asked us to support their outsourcing resilience risk management. Specifically, to evidence existing controls, identify areas to enhance their approach and to demonstrate they were taking action.
Stage one was to map the operating model, which would demonstrate our client’s need to outsource and show they were taking responsibility for this.
Next, we completed a risk and scenario assessment. This identified which scenarios could lead to the failure of a service provider and determined the contingency measures available should that happen.
Finally, we reviewed all contractual arrangement. This helped our client understand the controls their service providers had contracted in the event of each scenario. It also highlighted the practicality of implementing those contingency measures.
We worked collaboratively with our client and their service providers. Together we delivered a documented operating model plus a scenario assessment for specific risks, lines of defence and contingency controls.
We provided our client with a clear and concise set of findings and actions to enhance standardisation and exit planning, and to strengthen the contractual arrangements.