Basel may advise banks on outsourcing

"Cross-border outsourcing is increasing rather rapidly and this can mean increased risks," said the official, who did not wish to be named. This is one of the key issues likely to be considered in the context of electronic banking and risk management, he added.

This follows papers from the Basel Committee on Banking Supervision on the management and supervision of cross-border electronic banking activities, which were released earlier this month. The guidance primarily targets the retail sector, but the principles could also be applied in the capital markets, said the official. The papers aim to provide guidance to promote safety in electronic banking activities.

The first paper identified 14 risk management principles for electronic banking, to help banking institutions expand their existing risk oversight policies and processes to cover online banking. The second identified risk management principles specific to cross-border electronic banking. It also stressed the need for effective home country supervision as well as ongoing international co-operation between banking supervisors regarding such activities.

"In certain areas, such as the management of outsourcing relationships, security controls and the management of legal and reputational risk, the characteristics of the internet distribution channel call for more detailed principles than those expressed to date," said the paper. "We expect bankers to be mindful of the need to have in place adequate risk management processes, provide adequate disclosures to customers, and, in the case of cross-border activities, conduct appropriate risk assessment and due diligence."

But any decision on outsourcing and so-called ‘cyber security’ will probably be made after Basel II capital Accord has been finalised.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Next-generation technologies and the future of trading

At a webinar in association with capital markets technology provider Numerix, panellists discuss the potential for increased adoption of the public cloud to boost investment performance, its impact on risk management and overcoming barriers to…

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here