Outsourcing poses two-way operational risks for firms and service providers

First-time outsourcers might have overlooked or underestimated operational risks involved

Increasing transferral of services and technology via outsourcing by banks and financial firms is altering the dynamics of the operational risks they run, say some industry experts.

Budgetary austerity since the financial crisis has increased the popularity of outsourcing, whether through conventional services and software or via newer cloud and software-as-a-service applications. But service suppliers are reluctant to take on the costs banks chalk up to expected losses.

"A company might have