The Federal Financial Institutions Examination Council (FFIEC) regulates financial institutions in the US. It is responsible for establishing the standards and practices that keep organisations in this sector safe and resilient despite the risks facing their operations. America’s global reach means that even businesses based in other countries must be aware of how FFIEC compliance impacts them.
The FFIEC was established in the late 1970s and is responsible for regulating aspects of financial operations, including risk management and information security, among others. The result is that FFIEC guidelines define how organisations must protect data and deliver service continuity when disruption hits.
Businesses in the UK and Europe can strengthen their position by adopting approaches to risk management, security, and operational resilience that comply with the FFIEC’s rules, even if they don’t immediately need to work with US-based clients and partners. In addition to preserving mission-critical operations, compliance makes a firm more credible on the international stage.
GUIDE
Explore regulatory compliance requirements from the FFIEC, Federal Reserve, OCC, and FINRA regarding outsourcing critical IT services.
The simplest reason to meet any industry regulation, whether set down by the Federal Financial Institutions Examination Council or otherwise, is that it may be a legal requirement. Businesses beholden to these rules risk being punished if they ignore them. However, many other aspects of aligning your operations with FFIEC expectations justify the work involved.
Benefits of complying with FFIEC guidelines
FFIEC guidelines require institutions to regularly assess and monitor third-party providers for financial stability, security, and resilience. Software escrow plays a vital role in this process by providing a safeguard for accessing critical software if a vendor fails. A software escrow agreement reduces exposure to risks such as vendor insolvency, meaning firms can comply with FFIEC’s expectations for third-party risk management and operational continuity.
The FFIEC mandates that institutions extend Business Continuity Planning (BCP) and Disaster Recovery (DR) strategies to third-party providers. Software escrow supports this by ensuring access to critical software, source code, and data in the event of vendor failure. If a disruption occurs, firms can utilise the materials held in escrow to restore operations either in-house or with an alternative provider, meeting BCP and DR obligations and ensuring business continuity.
The FFIEC requires regular Business Continuity testing to allow for recovery if a vendor fails or systems get disrupted. Software escrow verification supports BCP testing by simulating real-world recovery scenarios. It confirms that institutions have the necessary material and knowledge to redeploy the application independently of the vendor.
In preparation for FFIEC examinations, firms must demonstrate how they manage third-party risks and ensure operational resilience. Software escrow agreements provide verifiable documentation that shows you have taken proactive steps to secure access to your critical software if a vendor fails. Software escrow verification supports audit readiness and shows that you have a well-established contingency plan in place, further emphasising compliance with FFIEC requirements.
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Software escrow agreements secure access to critical applications and source code, helping firms meet FFIEC requirements for third-party risk management and contractual exit strategies. Learn more.
Software escrow verification confirms that the material held in escrow is correct, complete, and deployable, supporting FFIEC requirements for resilience testing, continuity planning, and audit readiness. Learn more.
SaaS escrow solutions provide access and recovery for cloud-based platforms, ensuring firms meet FFIEC expectations for operational resilience and data control. Learn more.
“Being proactive and placing security and resilience at the start of any development means that we can confidently explore ideas and push boundaries, safe in the knowledge that we are managing any risk associated with our software supply chain responsibly”.
Andy Ellis
Head of NatWest Ventures
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