Drafting a Vendor Management Policy for your Financial Institution
Community banks and credit unions need to manage the risks associated with all services outsourced to vendors with a set of procedures and controls. A strong vendor management policy sets the stage for success in this effort. With the knowledge that your IT department is not the only department utilizing the vendor management policy, it is vitally important the policy implemented at your financial institution be understandable to all employees.
One of the most important aspects of any vendor management system is to assess the risk that each vendor presents. Again, since services outsourced can be from any department, the levels of risk associated with each vendor will vary. At Continuity Control, we advise credit unions and community banks to use a simple three tiered approach to assessing risk with each vendor.
After placing the financial institution’s vendor into a particular risk category, a consistent set of procedures followed within that category will control the associated risks. This simple, yet thorough system ensures that vendors are actually managed and that the staff at your institution understands what they are required to do and when it needs to be completed.
Continuity Control has a vendor management policy available for free, along with many other free financial institution policies and checklists available to our members. Control’s Community provides a collaborative forum for banks, credit unions and industry vendors to work together cooperatively to tackle the complexities of compliance. Members of Community can ask, answer or share in the forums and blogging platform on the site, thus building a shared environment that reduces the burden of compliance.
Free Webinar: Vendor Management – Compliance Checklist Manifesto Series
Regulatory examiners are expecting to see and review your financial institution’s vendor management program, which is to include a process for assessing specific vendor risk, vendor selection, contracting, and ongoing oversight. - Join this webinar to learn how implementing a repeatable process will provide consistency and reduce your financial institution’s Compliance Tax by saving you time and resources, including ensuring your valuable dollars are spent wisely.
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