Banking is not unlike other industries when it is faced with the question of how to get the job done—do you keep it in-house and invest in the resources necessary to support a particular task, service or product delivery, or do you look outside of the company for a qualified third party or strategic partner to meet the need? This question often is raised by individual business units deep within the enterprise and by business people who are focused on productivity and profitability. The danger presented by this situation is only as threatening as the controls established to manage third-party risks.
Recent research shows that failing to effectively respond to these challenges carries with it sizable and quantifiable costs that many managers fail to appreciate. These costs include the millions ofdollars paid as part of market conduct exams and their findings, lost customers and revenue opportunities due to improper claim handling, and costs of internal resources used to monitor and analyze regulatory content.