Financial Outsourcing And Its Risk Research

Financial outsourcing is a financial application service that uses an application service provider to operate another enterprise's financial business entirely or partly. Today's financial outsourcing has different types and thereby has heterogeneous characteristics such as off-shore operations, huge capital volume, time consuming and strategic importance.The reasons for the quick development of financial outsourcing include: (1) indirect motivations like fast evolving information technology, continuous developments of free markets and other financial innovations; (2) direct causes like the low-cost control, the competition for limited resources, the focus on core business, the desire for risk control and sustainable development. Despite its rapid development, outsourcing is still highly risky. Therefore, this thesis also presents effective methods to identify, evaluate and control the risks of financial outsourcing services.This thesis analyzes the causes of financial outsourcing services' risk, the risk types and risk events by using the strategic risk analysis methodology. Four types of risk factors are strategies, environments, resources and competence. Eight types of risks are: the decision making risks, human resources risks, finance risks, management risks, the system risks, techniques risks, market risks and provider risks. Twenty-one types of risky events include conflicts about contracts, interruption of contracts, shortage of human resources, mistakes or cheating, etc.. Risks need to be evaluated after identification. By constructing the risk evaluation system and exploiting risk matrix analysis, we can evaluate and sort risk events and thus provide effective outsourcing risk control.Due to the complex outsourcing risks, the risk control has to be conducted step-by-step and role-by-role. Multi-factor gradual analysis is used for calculating the total risks' index which is considered when making outsourcing strategies. Risk control during the outsourcing strategy's implementation, supervising and evaluation includes both internal control and external supervising. The internal control includes the financial organizations' controlling over the entire outsourcing process, their supervising, motivating, and evaluating over the outsourcers and their examining and motivating over other relevant personnel's of the outsourcing workflow. The externalsupervising includes the legislation introduced by the national governments and the supervising of international organizations to monitor the business.