Try To Talk About China's Financial Service Outsourcing Risk Prevention

Financial Services Outsourcing is a kind of activity and process thatfinancial enterprises turn parts of its own services business over to other economicentities.With the booming development of financial industry and the gradual deepening ofthe vocation division, the financial services outsourcing in our country has also achievedsignificant development in recent years. The financial enterprises may choose to outsourcecertain types of its business or parts of the business.The party of service providing also can continue to subcontract. All these make theoperating efficiency and the allocative efficiency of recourses in the financial enterprisesget greatly improved. This article discusses the theoretical basis on development ofFinancial Services Outsourcing as well as the motivation of promoting the development ofit in detail, pointing out and detailed describing the risks exist in the development offinancial services outsourcing, that is: Firstly, the legal environment of financial servicesoutsourcing in China is not perfect, which causes political risks when the legally binding ofoffshore outsourcing is relatively weak; secondly, the agent problems due to the party ofcontract out lack of the supervision on the contractors; thirdly, the banking institutionexcessively rely on a single contractor, losing the direct control on the business ofoutsourcing, caused the control risks; fourthly, the operation risk owning to the outsourcingagency lack of adequate capacity to complete the contracted work because of the technicalproblem, etc. This paper analyzes the risk prevention measures and experiences of foreignfinancial services outsourcing in detail, and through the analysis of the development andcurrent situation of Chinese financial services outsourcing, put forward the existing risksand problems, as well as the factors affecting those risks of financial services outsourcingin China. In addition, it further makes a explicit discussion on the countermeasures ofpreventing financial service outsourcing risks of China, including: reasonably affirming thescope of business and service providers, and fully carrying out audit work of financialservices outsourcing as well; signing thorough outsourcing contract; strictly enhancing theprocess management abiding by the contract and formulating relevant laws and regulations so as to develop the supervision system. by analyzing the development, existing risks andrisk prevention measures of China’s financial services outsourcing, this paper is makingefforts to ensure the healthy and orderly development of financial services outsourcing ofthe country.