Governance of financial services outsourcing: Managing misconduct and third party risks

Joseph Mc Cahery, Alexander de Roode

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

With financial institutions increasingly outsourcing their activities, they face a record number of fraud and misconduct cases arising from third-party services. We survey financial institutions to better understand which governance mechanisms may improve the monitoring and management of third-party relationships. Overall, our results suggest that there are gaps in traditional governance arrangements. We find that financial institutions rely mainly on internal monitoring to detect fraud and that whistleblowing plays an important role in mitigating misconduct risks. Finally, we report evidence that vendor dependency and product complexity play a pronounced role in delaying termination of agreements.
Original languageEnglish
Title of host publicationCorruption and fraud in financial markets
Subtitle of host publicationMalpractice, misconduct and manipulation
EditorsCarol Alexander, Douglas Cumming
PublisherWiley-Blackwell/John Wiley & Sons
Chapter15
Pages399-422
Number of pages24
ISBN (Print)9781119421771
Publication statusPublished - 7 May 2020

Keywords

  • Outsourcing
  • financial institutions
  • governance
  • fraud and misconduct
  • D22, D23, G20, G34

Fingerprint Dive into the research topics of 'Governance of financial services outsourcing: Managing misconduct and third party risks'. Together they form a unique fingerprint.

  • Cite this

    Mc Cahery, J., & de Roode, A. (2020). Governance of financial services outsourcing: Managing misconduct and third party risks. In C. Alexander, & D. Cumming (Eds.), Corruption and fraud in financial markets: Malpractice, misconduct and manipulation (pp. 399-422). Wiley-Blackwell/John Wiley & Sons.