The Federal Deposit Insurance Corp. is warning institutions about the risk of outsourcing technology, data processing, and call center services to foreign countries.
Using a foreign third party "raises country, reputational, operational/transactional, compliance, and strategic risks," the agency said in guidance issued Wednesday.
The guidance defined "country risk" as "exposure to the economic, social, and political conditions and events in a foreign country" that can make it tougher for the provider to deliver adequate service. Financial institutions should be aware that many U.S. third-party vendors subcontract services to foreign companies, the FDIC said, and institutions cannot accept the cost benefits of such arrangements "while ignoring the potential risks."
