Skip to content

FRM Part II · FRM Exam Part II · Guidance on Managing Outsourcing Risk

A bank's contract with an outsourced data-processing provider is approaching a dispute. Which clause most helps ensure the bank can continue operations if the relationship ends or the provider fails?

An exit and transition clause, covering data return, continued service during transition and clear termination rights, best supports continuity if the relationship ends or the provider fails. The other options either disadvantage the bank or do nothing for operational continuity.

  1. AAn exit and transition clause with data return, continued service during transition, and defined termination rightsCorrect
  2. BA clause awarding the provider intellectual property in the bank's data
  3. CA clause extending the notice period for the bank's complaints
  4. DA marketing rights clause

Explanation

Exit and transition provisions secure orderly termination, data retrieval and service continuity. The other clauses either harm the bank or are irrelevant to continuity.

Did you get it right without looking?

One question tells you little. A timed set on Guidance on Managing Outsourcing Risk shows your real accuracy, how long you take and where you lose marks.

Practise Guidance on Managing Outsourcing RiskFree diagnostic mock

More Guidance on Managing Outsourcing Risk questions