Page 6 - Knowledge_Insights_Brochure V9

8 SENSITIVE DATA:

Among the primary areas of concern detailed by the Central Bank in the DP around the
risk posed by outsourcing arrangements, was the handling of sensitive data in order for
OSPs to execute the outsourced services. The Central Bank references the importance
of having robust data management strategies in place to mitigate against associated risks.

In terms of the SLA governing the arrangement, there are three key points to note
from the DP:

1. the requirement to include provisions providing the RF with “the right
to audit the OSP data storage and management systems to ensure they are
aligned with the regulated firm’s requirements from a data perspective”;

2. the requirement to have separate Non-Disclosure Agreements in place
dealing with this matter in greater detail; and

3. the Central Bank suggested that RFs “should seek and take account of
OSP’s data accreditations and attain agreement on the frequency and format
of any renewals of these accreditations and of any management information
required from the OSP in relation to the service. This should be provided
through relevant clauses in the outsourcing contract”. 4

The Central Bank states that the above are in line with the principles set out in the CEBS
2006 Guidelines on Outsourcing, which highlight that RFs “must ensure that their contractual
arrangements with their OSP covers the protection of confidential information, banking
secrecy and any other specific provisions relating to handling confidential information”.

It appears from the above that the Central Bank is particularly concerned with how
sensitive data is being dealt with in SLAs, stating that it has “observed weaknesses in this
area as part of its supervisory engagement” and that where such clauses are included they
“have been deemed unsatisfactory by supervisors”. In addition, such supervisors noted
that “often intragroup arrangements are weaker in this regard than arrangements with third
party OSPs”.

It would be advisable for RFs to consider such clauses in their SLAs in the context of these
comments, to ensure they are adequately addressing the concerns of the Central Bank.

4. This point arose in the context of specific research carried out by PwC on behalf of the Central Bank in relation to the approach taken by other industries to this matter.

5 DISCUSSION PAPER 8 – OUTSOURCING FINDINGS AND ISSUES FOR DISCUSSIONS www.matheson.com

26/02/2020 12:13
DIR4551_Math_Knowledge_Insights_Brochure V9.indd 5 26/02/2020 12:13
DIR4551_Math_Knowledge_Insights_Brochure V9.indd 5