Are Your Vendors and Suppliers Putting You at Risk?
Vendor Risk Management (VRM) is a process for managing and assuring that the third-party vendors and services your company is utilizing do not create negative impacts on your performance or operations.
A VRM program is designed to assist you in managing and monitoring vendors for potential risks. A risk management program must be methodical and organized to be effective. Due to the ever-changing nature of business in today’s financial markets, cost control and efficiency in supply chains are a must.
Ask yourself these questions right now:
Are my vendors and suppliers in compliance with all applicable regulations? Is my company safe from any risk created by any of my vendors?
The fact is, not many companies can answer these questions with a confident “yes!“
If your company doesn’t have some sort of vendor compliance policy already in place? It could open itself up to unforeseen costs generated by non-compliance. These costs can stem from late deliveries, improper shipments, hidden costs, and other unauthorized fees associated with existing products and services. Not to mention the fact that some regulations will not only penalize a vendor for violations like data privacy breaches, but also the client who initiated the work in the first place.
A solid vendor risk management system that offers a platform for vendor compliance will help you avoid disputes and unnecessary charges – and save you time.
Setting up effective vendor compliance
An effective VRM software solution offers a platform where you can create an oversight and policy compliance dashboard that’s based off of your current internal policies. This dashboard will show all of your vendors at a glance and if the internal policy requirements are met or outstanding. This means that for each vendor there will be a policy requirement matrix as part of the vendor relationship profile that will show all the policy requirements that are required for them based off their level of risk (critical- low risk) to your company.
For each vendor, you should be able to tell quickly if they are complaint or not for all aspects of your internal policy. As well, the VRM solution should be able to assign certain documents that are already in the system to meet the policy requirements.
Finding efficiencies in VRM
Communication is vital for vendor compliance. To make sure you have all the necessary documents and other data in place, you’re going to have to work with a variety of customer service teams among all of your vendors.
Working with outside customer service support teams, it’s important to be courteous and have a clear picture of the missing content when you talk with them. This will ensure that you are giving them all the information they need so they can provide you with the correct documentation to make them compliant as a vendor.
The best VRM solutions can remove some of that work for you, with dedicated due diligence teams that help you acquire the necessary SOC1/SOC2, financial, business continuity, insurance, and information security documents. They can also take the time to perform a compliance review.
Having a vendor risk management system that delivers comprehensive oversight and policy compliance will help ensure that you have a lasting relationship with your vendors. The long-term goal is to be able to monitor all of your vendors but to keep a closer eye on those who could pose a negative risk to your growing business.
Having a risk management platform that you can trust to help you keep track of your vendors will give you the peace of mind to continue to grow, and bring on new vendors over time.