Critical third parties

Risk management - risk identification - supply chain - financial services - systemic risk.

1. UK - HM Treasury (HMT).

An entity that:

• Provides critical third-party services to financial services firms, the failure or disruption of which services would be a significant risk to the stability of the UK financial system, or to confidence in it;
• Is designated as a critical third party by HM Treasury; and
• Is accordingly subject to additional regulation, to manage the related risks.

"If many firms rely on the same third party for material services, the failure or disruption of this ‘critical’ third party could have a systemic impact across the financial sector.

Moreover, firms’ dependency on a limited number of critical third parties for key services within the financial services sector has increased in recent years and continues to do so.

As of 2020, for example, over 65% of UK firms used the same four cloud providers for cloud infrastructure services."

Critical Third Parties to the Finance Sector, Policy Statement, June 2022, HM Treasury.

2.

Similar entities in other contexts.

See also

• Cloud
• Cloud infrastructure
• Critical service
• Financial authority
• Financial institution
• Financial Market Infrastructure
• Financial stability
• Financial Stability Board (FSB)
• HM Treasury (HMT)
• Infrastructure
• Material
• Outsourcing
• Risk
• Risk identification
• Risk management
• Service provider
• Systemic risk
• Systemic third-party dependency
• Third party
• Third-party risk
• Third-party risk management
• Third-party service provider
• Third-party service relationship

Other resources

• Enhancing Third-Party Risk Management and Oversight: A toolkit for financial institutions and financial authorities, Financial Stability Board, December 2023

• Critical Third Parties to the Finance Sector, Policy Statement, June 2022, HM Treasury