Outsourcing is now an extensive practice and not least in banking, insurance, etc. Under multi-year agreements a wide range of functions, often important if not critical like IT operations, are undertaken by specialist arms-length companies or multiservice groups.

Originally thought to reduce the risk profile of banks etc among other benefits, they principally change one set of exposures for another. Arrangements such as performance specifications, which if not fulfilled trigger compensation and warranty payments, simply provide monetary compensation for something the principal would rather not have happen in the first place.

And a strategic risk is introduced as well – the principal now has little visibility on or influence in the operations, and has reduced expertise in them. Most critically, two fundamental functions in today’s banks (KSFs indeed) are often now in the hands of other companies: for example banks at their core are now information transferring, processing and storing businesses. A second example is live contact and customer service for retail customers, with retail banks using agencies for telephone and internet contact whilst closing their high street presence.

In this webinar, Edward Sankey presented approaches to improve risk management around outsourcing. He shared best practice approaches to ensure that the risks to the principal are adequately managed.

About the speaker

Edward is a managing consultant in corporate and operational risk management in financial services. He also has had a long assignment as Interim Director, Operational Risk and member of the Risk Committee at the Santander UK group. In this he was appointed by the UK Regulator the Approved Person in Santander UK for the management of Operational Risk.  Edward has previously led risk consulting activities in Marsh Europe (of Marsh and MacLennan/MMC), City Practitioners, AEA Technology/Risk Solutions and KPMG.

Projects have been in retail and corporate banking, wholesale markets, insurance, investment management, full range major banks, and for a regulator/supervisor. They have covered:

  • directing operational risk management including reporting to Directors and Risk Committee
  • assessment and control of strategic and operational risks, including leading scenario analysis programmes
  • upgrading risk management frameworks: information, organisation, and processes
  • enhancing major projects, M&A, outsourcing through risk management
  • briefing and training directors, managers and staff in risk management
  • developing and implementing Operational Risk Management approaches to the new aggressive cyber attacks
  • preparing Basle 2 Capital Adequacy assessments and the Pillar 2 ICAAP Report

He has worked in the UK, Europe including Russia, and elsewhere, with significant experience in the Far East. His background is in programme leadership, strategic development, risk process design, organisational planning, application of statistical analysis/modelling, management seminars and workshop facilitation. He is an experienced presenter and trainer in Operational Risk Management.

As well as a Fellow at the IOR and a past Chairman, Edward is an Honorary Life Member of the Institute of Risk Management. A frequently sought presenter on Risk Management, he has contributed the section about Operational Risk Management to the recent book “The Risk Management Handbook” published by Kogan Page (London). Edward is a member of the City Values Forum set up by the Lord Mayor of the City of London which focuses on organisations’ cultures and individuals’ behaviors.

About the host

This session was hosted by Manoj Kulwal. He is passionate about utilising risk management as a business management tool for designing effective business strategy and successfully implementing the selected strategy. He has been involved in development of the international risk management standard ‘ISO 31000’ and in development of ‘Certificate of Operational Risk Management’ offered by The Institute of Operational Risk. He has trained more than 1,000+ operational risk management practitioners from financial services firms globally over the last 5 years. He is currently the Co-Founder and Chief Risk Officer at RiskSpotlight. At RiskSpotlight, he leads the team that developed the world’s first forward-looking operational risk news service – RiskSpotlight Portal.

Click here to download the slides for this session

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