What Contingency Planning should youdemand as part of Outsourcing Contracts?

Nick SimmsDirector, Cornwood Risk Management

3 TYPES OF DISRUPTION

• Supply

• Supplier

• Our own

4 TYPES OF CONTINGENCY

• Prevention

• Detection

• Escalation

• Correction

SUPPLY DISRUPTION - CAUSES

• Disaster• System failure• Security breach• Data corruption• Transmission failure• People• 3rd party failure

CONTINGENCY

• Remove Force majeure clauses• Agree Service Levels and responsibilities• Require supplier to assess and manage risk

– Audit its own suppliers– Succession planning– Tested back-ups– Tested recovery plans

• Agree Triage plan• Understand where you fit in their priorities• Document and test internal workarounds

– Data reformatting• Agree escalation plan

SUPPLIER DISRUPTION - CAUSES

• Bankruptcy

• Closed by courts

• Withdrawal from market

CONTINGENCY

• Conduct credit checking• Take up references• Review supplier news regularly• Ensure constant dialogue• Develop plans for bringing service in-house• Identify alternative supplier (s)

OUR DISRUPTION - CAUSES

• Disaster

• System failure

• Security breach

• Receipt failure

CONTINGENCY

• Ensure supplier can redirect service• Test supplier’s ability to provide additional services• Include on-site supplier staff in evacuation plan• Agree Communication plan

– Outsourcer’s management– Outsourcing staff working on-site

SUMMARY

• Outsourcers are an integral part of your business

• Ensure you are managing your risk and ensure that your suppliers are managing it too.

CORNWOOD CONSULTING

• Provides Business Continuity and Operational Risk consultancy and training services primarily to Investment Banks and their support community

CONTACT DETAILS

• Nick SimmsCornwood Risk Management Ltd14 Greenhalgh WalkLondon N2 0DJ

Tel: 020 8731 6510Fax: 020 8731 6511E-mail:nicksimms@cornwood.co.ukInternet: www.cornwood.co.uk