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Companies ill-prepared for outsourcing failures

The firm’s survey of third party governance and risk management (TPGRM), found that just 11% of UK companies feel equipped to deal with such failures during times of uncertainty. The global survey of over 500 organisations, which included the responses of 107 UK companies across all sectors, also found that the UK had one of the highest dependencies on outsourcers, at 80%.

Deloitte recently calculated that third party failure could cause shareholder losses of an average 2.55% or up to 10 times the regulatory fine. Historically, this has ranged from £1.3m to £35m, reaching £650m for internationally-operating firms subject to global regulation.

Kristian Park, global extended enterprise risk management partner, Deloitte, said: ‘This year’s survey results demonstrate that third parties are increasingly relied upon, with this trend likely to increase. Unfortunately, management processes and technology that support the oversight of these relationships are not keeping up, creating an “execution gap”.’

Deloitte estimates that most large organisations take between two to three years to develop an integrated TPGRM framework. The firm predicts that 2017 and 2018 will be the years when companies make significant strides in addressing this issue, driven by considerations such as preparing for the UK’s exit from the EU.

Article source: https://www.cchdaily.co.uk/companies-ill-prepared-outsourcing-failures

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