On June 8, 2023, the Federal Reserve, the OCC, and the FDIC issued a final joint guidance on managing risks associated with third-party relationships. The guidance provides sound principles that support a risk-based approach to third-party risk management that banking organizations may consider when developing and implementing risk management practices for all stages in the life cycle of third-party relationships.
The final guidance will replace each agency’s existing general third-party guidance to provide a consistent approach to managing risks associated with all third-party relationships. The guidance serves as a useful resource to assist banking organizations implementing third-party risk management practices by providing examples of considerations in the planning, due diligence, contract negotiation, ongoing monitoring, and termination stages of managing third-party relationships. The guidance also clarifies that not all third-party relationships present the same level of risk or criticality to a bank’s operations.
The guidance is final as of June 6, 2023. According to the Federal Reserve Board’s press release, the agencies plan to engage with community banks immediately and develop additional resources in the near future to assist them in managing relevant third-party risks.
Read the FRB press release here.
The final guidance can be found here.