Outages in banks' processing systems "are avoidable" and are the result of management weakness, the banking regulator asserts in an overview of industry risks published in its periodic publication, Insight.The Australian Prudential Regulation Authority said it had "observed a marked reduction in the number of high severity system outages" recently.But, in keeping with a theme pursued by regulators over the last year, it noted that "serious outages still occur".It said these "are the result of poor knowledge retention and a high reliance on third parties."Reliance on third parties for system support and transaction processing is becoming more common in the banking sector. Westpac, for example, has opted to outsource (and offshore) many more routine tasks through a number of suppliers.APRA said that, from its perspective, "risks arise when efficiencies are sought through reductions in critical support functions.""In particular, under-investment in risk management capabilities can leave ADIs more exposed to any future deterioration in economic conditions."