How Strunk can assist you with Tiering your Vendors and applying the proper monitoring to them

A vendor is a company or individual that supplies a product or service to your organization, irrespective of a formal contract. For financial institutions, some vendors may include technology partners, banking equipment providers, financial partners, legal and professional services, and office supplies vendors.

Financial institutions sometimes work with hundreds of relationships with third-party vendors that can pose potential risks, and those risks vary based on the nature of the business. This is why it is important to have a comprehensive third-party risk management program. Not all vendors are created equally. Some products, services, and relationships may be more important to our organization than others. Additionally, some vendors may have more robust risk management procedures than others. This is why it is important to categorize your vendors based on risk. By using third-party risk assessment and tiering to each vendor relationship, financial institutions may be able to determine the appropriate mix of risk management and modify them to the specific risk of the relationship with the vendor. This way, the financial institution can prioritize which vendors to focus on for reviewing controls, policies, and procedures. Strunk’s Vendor Manager software can ensure that higher-risk vendors are prioritized and that monitoring activities are created based on their risk rating. Following this approach, financial institutions can manage risk for each third party and integrate the property compliance controls for the risk. By using the monitoring section inside of Strunk’s Vendor Manager software, financial institutions are able to assess how hundreds of important, high-risk relationships are performing across the board and create a vendor summary that will provide a greater transparency into these relationships.

Regulatory scrutiny and compliance pressures provide strong reasons to carefully consider vendor risk. Financial Institution leaders should also recognize that establishing stronger and safer vendor relationships is crucial for business success. The current challenge is that many banks lack a comprehensive vendor risk and monitoring program that takes into account the different types of services provided and the associated risks. However, the good news is that Strunk’s Vendor Manager software can help address this issue and automate the process.