Often, you may wonder how mature your vendor risk management program is compared to peers and the industry. Some may measure this in terms of budget dollars spent on the program, vendors under management, head count or sophistication of the technology utilized to support the program.
Organizations spend a large amount of employee time and financial resources to complete and maintain compliance with the various regulations regarding vendor risk management and other important risk reviews of vendors. Most have created a vendor risk management program to complete and coordinate these reviews.
In the development of these vendor risk management programs, organizations began capturing and documenting reviews using Word or Excel. As programs grew, some implemented technology solutions to help manage and simplify the process while others simply grew staff to keep up with demand.
Vendor Management Program Maturity Guidelines
You can benefit from a self-assessment of your vendor management maturity levels. Gauging the existing level of process maturity can provide a starting point for vendor management teams to identify areas of strength, expose gaps and chart an improvement plan.
When assessing the maturity of your vendor management program it’s important to keep the following vendor management organization guidelines in mind:
- What processes are truly a value add to the organization? If it doesn’t provide value then you should ask yourself why is it part of the program and what’s the purpose?
- Does your vendor management framework support the overall strategic and business objectives of your organization?
- Is your vendor management program aligned with how your organization conducts business?
- Do you have the right people in the right place within your vendor management organization?
- Are your processes scalable and repeatable to handle increased capacity and scope?
- If you rely on other organizations to support the vendor management process, have you assessed their capabilities in supporting your program?
- Establish service level agreements internally with stakeholders of the vendor management process and business partners.
- Once SLAs have been established, continually review and assess their effectiveness and if they are meeting the needs of the organization. If not, reassess your process.
- Be open to change and new ideas, do not continue to perform activities within your program just because “that’s the way it has always been done.”
- Review your vendor management program framework to look for redundant activities. Each part of the framework should be reviewed to include:
- Policies, Standards and Procedures
- Vendor Risk Identification and Analysis
- Skills and Expertise
- Communication and Information Sharing
- Tools, Measurement and Analysis
- Monitoring and Review
Understanding Your Vendor Management Program Maturity
So, what’s your maturity? Let’s figure that out.
For each component of the vendor risk management program, you should evaluate that activity based on where you think it is from a planning, development, execution, implementation and operational/ongoing standpoint.
Each one of these areas has unique challenges and presents its own set of factors for you to consider:
- Planning – activity is not well-defined at this point and the overall approach is inconsistent
- Development – activity is defined but the overall approach is not structured
- Execution – activity has been formalized and is operational but may not be fully understood or enforceable within your organization
- Implementation – activity is fully implemented and accepted within your organization, governance and monitoring activities are being defined
- Operational – cycle of review and improvement, governance and monitoring activities are underway
Once you’re able to determine the level of maturity, it can more effectively determine which parts of the framework to focus on for improvement. As 2019 approaches, many vendor risk management programs are focused on improving efficiencies, meeting regulatory demands and increasing their role within the organization’s overall risk management structure.
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