Outsourcing: The Warning Bells Have Started to Ring

IFRS 17 Data Governance Whitepaper


Over the last decade, financial institutions have been increasingly interested in outsourcing business activities in order to reduce costs and improve their flexibility and efficiency. In the context of digitalisation, the increasing importance of information technology and emerging technology providers (such as FinTechs), financial institutions needed to adapt their business models to embrace such technologies. Outsourcing is a mechanism that allows a regulated financial institution to get relatively easy access to new technologies and to achieve economies of scale.

However, there are risks associated with outsourcing. The 2019 European Banking Authority (EBA) Guidelines on Outsourcing Arrangements set out the minimum requirements that regulators expect firms to implement in order to manage these risks.


The EBA Guidelines on Outsourcing, issued in February 2019, established a more harmonized governance and risk framework around outsourcing (taking into consideration the previous 2017 EBA recommendations on outsourcing to cloud service providers).

Since the EBA Guidelines entered into force in September 2019, European countries have started to transpose the outsourcing requirements into their own regulatory framework. Beyond the high-level requirements on outsourcing set out by the EBA, this White Paper provides an overview of the pan-European regulation and discusses the transposition of the EBA Guidelines into local regulatory practices. This allows financial institutions to assess their level of compliance with regulatory requirements and evolving supervisory expectations on outsourcing.


The scale and scope of the EBA Outsourcing Guidelines and new regulatory developments at European level will require many financial institutions to consider a fresh approach when managing outsourcing and third party relationships. Failure to manage third party risks threatens the operational viability of any regulated financial institution. What are the potential risks a well-prepared organisation should consider in order to fulfil the expectations of the supervisory bodies?

EBA Outsourcing Guidelines

This Outsourcing White Paper focuses on the following aspects and provides a few handy tips that institutions may wish to consider:

  • Assessment of Outsourcing Arrangements
  • Governance Framework
  • Outsourcing Process
  • Pan-European Implementation
  • Key Elements from Local Regulators
  • Linkages between Outsourcing, 3rd Party Risk Management and Operational Resilience



Reply is a recognized partner for a large number of G-SIBs, D-SIBs and other banks in the UK and in the Eurozone, when addressing outsourcing and third party risk management matters.

Click the tabs below for an overview of ‘assets’ that Reply has developed to assist UK and Eurozone based financial institutions.

To learn more, please download the full PDF White Paper for free and don’t hesitate to contact us for further questions.

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    Established in 2004, Avantage Reply, a member firm of the Reply group, is a pan-European specialised management consultancy delivering change initiatives in the areas of risk, finance (treasury and capital management, regulatory reporting), compliance and operations, with an excellent reputation for delivering solutions to its clients’ most challenging issues.