As to the design of the investment process the principles contained in Article 261(a) apply, in addition to the general investment risk management requirements under Article 260(1c) of Delegated Regulation 2015/35.

As to outsourcing, Article 13 of Directive 2009/138 (Solvency II Directive) stipulates that outsourcing means an “arrangement of any form between an insurance or reinsurance undertaking and a service provider, whether a supervised entity or not, by which that service provider performs a process, a service or an activity, whether directly or by sub-outsourcing, which would otherwise be performed by the insurance or reinsurance undertaking itself.”

The undertaking needs to decide whether an arrangement falls within the definition of outsourcing. Hiring a specialist consultant, for example, to provide one-off technical advice or one-off support for an undertaking’s risk management does not normally constitute outsourcing. However, it may become outsourcing if an undertaking subsequently relies on that consultant to manage an internal function or service, e.g. when it is installed or becomes fully operational. (See EIOPA-BoS-14/253, Final report on Guidelines on system of governance, explanatory text to GL 60, page 99). Hence, the more the service is provided on a frequent and regular basis, the more likely it is that the activity is considered to be outsourced and therefore Article 49 of the Solvency II Directive as well as Article 274 of the Delegated Regulation are applicable.
 
It shall be noted that the final decision on the activity will always be with the undertaking according to Article 40 of the Solvency II Directive, which remains fully responsible for the outsourced function or activity. In that respect, Alternative 3 where it states “SII departments follows it without additional assessments”, may not be appropriate, in particular as the undertaking should designate a person within the undertaking with overall responsibility for an outsourced key function […] able to challenge the performance and results of the service provider. (See Guidelines on system of governance, GL 14).