Crucial Elements for an Effective Vendor Risk Management –
1. Due Diligence Standards –
(a) Know the organization
(b) Determine their good standing and licensed to conduct business
(c) Gather documents to show they are a well-managed and compliant operation
2. Assess the risk –
(a) Look for gaps or areas that may cause concern
(b) Use a rating system to be objective and consistent
(c) Identify risks and Determine how can we minimize exposure
3. Ongoing Monitoring –
(a) How will you manage this vendor going forward?
(b) Are there performance metrics that will require regular reporting?
(c) Is there some sort of quality of service you need to measure?
4. Contract Standardization –
(a) Be sure that the vendor has certain obligations
(b) Define each party’s roles and responsibilities
5. Termination and Exit Strategies –
(a) Determining early how termination will be handled.
6. Board Involvement –
(a) Senior management and the board of directors must be kept informed of the status of your vendor management program.
Risk Management Frameworks are built to guide organizations that require a Disciplined and Systematic approach to Management that looks beyond Compliance to Emerging risk.