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Why Firms Can’t Contract Out Their Legal Obligations to Their Chosen Provider

April 20, 2023

Some companies might think that outsourcing a whole function will hand over all the associated compliance responsibilities to the provider. This is a misapprehension – and a dangerous one at that.

Although farming out work to a specialist provider will give a firm access to experts in their field, the client would be wrong to assume that handing over a whole function outsources every liability associated with it. This is particularly true when the work in question is tightly regulated, making compliance a key consideration.

The risk that an outsourced provider will lose data as the result of a cyber attack can be a particular concern for businesses. FRA Partner Weng Yee Ng comments in Raconteur’s report Future of Outsourcing on why firms can’t contract out their legal obligations to their chosen provider and what steps organisations can take to mitigate the various risks associated with their outsourcing arrangements.

She says: “We often hear the saying ‘if the data breach doesn’t kill your business, the fine might’, which succinctly describes both the reputational and financial risks”.
“These should serve to ensure that your service provider is keeping up with the latest developments in the relevant regulations – and that its processes and controls duly address those requirements".

Read the full article published in Raconteur’s report, Future of Outsourcing.

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