What is a key distinction made in relation to outsourcing in risk management?

In the context of risk management and outsourcing, the distinction involves understanding the concepts of responsibility and accountability. When an organization outsources a function or service, it can transfer the responsibility for performing that task to a third party. This means that the outsourced entity is responsible for carrying out the agreed-upon tasks or services.

However, accountability remains with the organization that originally held the responsibility. Accountability refers to the obligation of the organization to answer for the outcomes of the actions taken by the outsourced entity. The organization must ensure that the outsourced functions align with its risk management strategies and overall objectives.

Thus, while the operational duties can be handed off to a third party, the ultimate accountability for those functions—including any risks or failures that arise—remains with the organization. This distinction is vital to ensure that the organization maintains control over its risk profile, even when tasks are being performed by external parties.