5 Best Practices for Vendor Management Reporting to the Board

We often get asked about the best practices around vendor management board reporting. It’s a challenge because there is no prescriptive template – however, from years in the business, one thing is clear:  it’s crucial to ensure the tone-from-the-top by keeping your senior management team and your board informed on developments in your third-party risk management program. Especially when it comes to your critical and high-risk third parties.

Vendor Management Board Reporting Best Practices

What does this look like in practice? Here are a few best practices to help get you started:

1. Keep it consistent and keep it simple.

First, the board has hundreds, if not thousands, of pages of materials to go through at each meeting and a limited time to do so. It’s important to make the board’s job as easy as possible. Come up with a consistent format that everyone can navigate with ease.

Pro-tip: If your organization doesn’t have a standard reporting template for the board, create one for your program. Ask your senior management team for direction on what to present and how as they’ll guide you on presenting to the board.

2. Agree on a meeting schedule.

You should be presenting to the board and to a committee of the board on a regular basis as high-functioning organizations have regularly scheduled meetings with agendas and minutes. Find out when the normal dates and times of board meetings and committee meetings are scheduled.

With direction from your senior management team, agree on the meetings your third-party risk management program will attend and the dates for your program’s presentations. Typically, you’ll want to update your risk committee monthly and your board quarterly. Anything that requires immediate attention should be presented to the senior management team as soon as possible.

Pro-tip: A committee of the board is a formal committee that will meet at least quarterly and will report the content of their meetings to the board at the first board meeting after the committee meets. Committees of the board can be used to communicate relevant information to the board.

3. Remember, formal meetings have formal minutes.

Every board meeting and every meeting of a committee of the board will have a formal set of minutes for each meeting. While they may not capture everything that happens in every meeting, relevant information covered in these meetings will be captured in writing. Ensure your risk management reporting is captured accurately in any meeting that your present a report to or respond to questions from the committee. Regulators will want to see evidence of the discussion in the meeting minutes.

4. Set clear and concise guidelines.

Spell out your third-party risk management program’s reporting schedule and content in your organization’s third-party risk management program document.

5. Streamline your presentation.

Make sure you provide the board with all relevant third-party reporting and any information they may require when making decisions.

Here are recommendations for what you should be preparing and presenting:

• High-level summary of your organization’s vendor portfolio
• Just the numbers, save the details until you are asked for them
• Any new regulatory requirements
• Due diligence and vendor selections that are underway
• High-level summary of your risk assessments (i.e., what’s in progress, completed and the overall results)
• Vendor risk issues that are outside of the risk parameters you set in your policy and program documents
• Reporting timeline (i.e., List the reports you’re providing and to whom)
• Industry highlights

Other items you might consider presenting:

• A list of newly vetted and approved third parties (and their relative risk)
• Recommended terminations and authorized pending terminations
• Any significant changes to high-risk third parties
• A rolling list of contracts up for renewal/non-renewal in next 12 months. Allow plenty of time for review before the renewal period

Board reporting is a regulatory requirement. Why not use the reporting process and the reporting cycle to inform your senior management team and board and give them the opportunity to help build your program to fit the needs of the organization? Frequent, accurate updates for your board, senior management team and any committees of the board are one of the sure-fire ways to gain their support, respect and trust.

Dive deeper into how to report vendor management information to the board. Download this toolkit to help.