Information Technology Examination Coverage of Financial Institutions’ Oversight of Technology Service Providers - Report No. 07-005

Guidance
Information Technology Risk Management Program (IT-RMP)Office of Inspector GeneralRisk Management

In the first 10 months of 2006, over half of the 213 information security breaches reported by financial institutions to the FDIC involved technology service providers (TSP). In accordance with federal laws and regulations, financial institutions must safeguard sensitive customer information against unauthorized disclosure when outsourcing various information technology (IT) operations to TSPs.

Interagency guidelines contained in Part 364 of the FDIC Rules and Regulations establish key controls over TSPs, noting that each bank shall (1) exercise due diligence in selecting TSPs, (2) have contractual arrangements with their TSPs that require appropriate measures to safeguard customer information, and (3) provide ongoing monitoring of TSPs to ensure they have satisfied their contractual obligations.

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