Page 43 - Insurance Times March 2022

contract signing, during transition of services and outsourcing support processes, requirement
during ongoing steady state service execution. processes, administrative processes etcetera.
Following are the ways to mitigate the risks that
O Systems: All hardware and software system
may originate at any of the above stages:
O Only agreeing for justifiable client/vendor O People: All people involved in engagement
lifecycle such as Architects, Product Owners
needs
Product Managers, Scrum Masters, Software
O Reducing the “at risk impact” – the relative engineers, Quality Analysts and Business
weight of At-Risk amount distribution must Analyst.
align with the priorities of the engagement.
O External Factors: Local labor laws,
O Defining SLA targets right- different targets
International labor laws, Market, and
during peak and off-peak hours must be defined
regulatory changes.
and must be realistic within the context of the
engagement and not pure aspiration. c) Outsourcing Readiness Assessment:
Y Potential causes of project failure may not always
O Baseline exercise- validation of proposed SLA be the fault of the vendor, the firm may also have
targets based on past performance data gaps in operation readiness for IT outsourcing, for
analysis. During the baseline period, the example the firm may not have proper process
performance against agreed set of SLAs is capabilities in place to support an external team
measured, tracked, and reported.
and so assessing the organization readiness for
O Earn back clause- the clause specifies how an outsourcing is an essential step to managing risks
SLA credit may be reversed and serves as a that originate with outsourcing activities.
positive incentive for the supplier to correct the
Y The firm may need to outline the reason for
underlying root cause for the default.
outsourcing that are justified, ensure how the
O Continuous improvement clause- the clause outsourcing will fit the firm’s overall business
must factor the actual performance during the strategy, set goals and expectation, set escalation
previous year and must be subject to upper and intervention forum, micromanage the capacity
limit. needs and determine areas that the firm expects
O Excused events clause – accounts for factors the vendor to bring value to.
where the supplier shall not be responsible for d) Strong Practice to Monitor Delivery:
an SLA failure if the failure was caused by
Y Risk management in outsourcing often focuses
conditions such as outages during scheduled heavily on the planning and contract stages. But
maintenance window etcetera. proper assessment needs to continue throughout
Y SLA risk management at implementation phase- outsourcing project lifecycle. It can be achieved by
few steps to consider mitigating risks during a setting forth relevant performance metrics and
project or program phase can be communicating KPIs.
and informing all stakeholders about the SLA risk
queue on time, escalation on time for any risks
observed during production environment drop
phase, planning and prioritizing with the help of
seniors, integrated toolsets, and real time or near
real time dashboards that provides the delivery
team a visual statistic about the SLA performance
and likely SLA breach.
b) Risk Assessment:
Y Each risk outlined above is process, system, people,
or external environment related and thus requires
assessment in different categories to identify risk
at a stage that enables effective intervention.
O Processes: all process associated with

The Insurance Times, March 2022 43