LONDON, July 9 (Reuters) - Board directors of banks must

take ultimate responsibility for outsourced services and

document how they manage the risk of outages and disruptions to

customer services, the global Basel Committee of banking

regulators proposed on Tuesday.

Banks increasingly use third-party tech companies, such as

Microsoft ( MSFT ), Amazon ( AMZN ) and Google, for

cloud computing to run key services, raising concerns among

regulators about the impact on the financial sector if a

provider used by many banks went down.

"Ongoing digitalisation has led to rapid adoption of

innovative approaches in the banking sector," the Basel

Committee said in a statement.

"As a result, banks have become increasingly reliant on

third parties for services that they had not previously

undertaken."

The committee, made up of regulators from the G20 and other

countries, proposed 12 principles for banks and their regulators

to apply, noting that the bank's board of directors has ultimate

responsibility for oversight of third-party arrangements.

"As with all business processes, documentation evidencing

key decisions (e.g. third-party strategy, board minutes

reflecting decision to enter into a critical... arrangement)

should be maintained in banks' records," Basel said in its

consultation paper.

Third-party services have come under increased scrutiny as

hackers continually try to breach banks' cyber defences and

undermine operational resilience, leading to suspension of

customer services for hours or even days.

The European Union has approved a Digital Operational

Resilience Act (DORA) to improve resilience in the financial

sector from January next year, with Britain doing likewise.

Basel said banks should undertake "appropriate due

diligence" of risks before they sign contracts with third

parties, and monitor how the service is performing.

Banks should also maintain "robust business continuity"

management so they can operate during a disruption, Basel said.

(Reporting by Huw Jones; Editing by Emelia Sithole-Matarise)