Vendor Management Best Practices
Third-party vendors help financial institutions streamline processes and get work done efficiently. But relying on third-party vendors comes with risks, too. Data security and availability are crucial for fine-tuning operations and staying compliant with FFIEC regulations. Here are five best practices for how to manage vendors.
Assess Vendor Risks
Even a very small software company can have a huge impact on your network’s security. Assign vendor risk based on how important the vendor is to your business and on what type of data they can access.
Communicate Well and Often
Confirm clear goals, expectations, and measurable success metrics at the beginning of your vendor relationships. Develop your relationship with vendors by providing open lines of communication and confirming that your company’s priorities are clear. When changes happen at your organization, alert your vendors — they may have offerings that can help.
Prioritize Your Organization
No matter how good you feel about your relationship with your vendors, there may come times when you feel pressured to invest in a product or service that you don’t think will benefit your company. Letting vendors know your deciding factors for purchasing goods and services and giving them an overview of your style will save you both from the frustration that may arise in these situations.
Centralize Document Storage
Keeping track of hundreds of documents ranging from vendor contracts to escalation reports can be a nightmare. Storing documents in one centralized, accessible, and secure location allows for better record-keeping and improved processes for digital workflows.
Stay on Track with Due Diligence
You are responsible for your vendors’ mistakes. Examiners view the vendors’ work with banks or credit unions as indistinguishable from hiring institutions’ work. Improve the efficiency of due diligence tasks by using customized templates and tracking these tasks via a task manager.
Be Prepared for Effective Escalation
No matter how careful you are, it’s likely that you’ll eventually encounter a problem with a vendor. Be prepared to escalate, meticulously documenting each step of the way. With the right systems in place, crucial issues can be handled appropriately.
Have Procedures in Place for Rainy Days
Don’t let your operations screech to a grinding halt in the event of unplanned downtime from your vendors. Implement backup procedures and systems.
Vendor relationships end due to changes in available technology, security issues, and many other reasons. Make sure there’s a sunsetting process that governs how to de-couple.