Regulators Seek Feedback on Third-Party Risk Management Guidance and Community Bank Engagement with Core Service Providers

In recent weeks, U.S. regulatory agencies have issued a public comment request regarding proposed guidelines for third-party risk management and an advisory statement for community banks engaging with core service providers. This initiative aims to strengthen internal processes for monitoring and mitigating risks for financial institutions, particularly smaller entities known as community or small banks (SBBs). The move comes in a global context where corporate governance and efficient supply chain management are increasingly prominent. These SBBs heavily rely on third-party services such as core system providers or other critical technological solutions. This new guidance seeks to ensure that these banks are capable of adequately managing risks associated with contracting such external entities while remaining compliant with regulatory standards. Seeking public feedback highlights the ongoing dialogue between regulators and the financial sector, aiming for a balance between operational security and efficiency in today's business environment.