Vendor risk management or, more specifically, third party risk management has received a great deal of attention over the past decade by all of the major regulators, the NCUA included. We’ve seen a a lot of new regulatory guidance, some more stringent than others.
The National Credit Union Administration (NCUA) has the oldest of the guidance that is still in force, dating back to the NCUA Supervisory Letter 07-01, which can be referenced here. Though they have issued several additional alerts, they all reflect back to this guidance, which at the time was seen to be fairly prescriptive.
3 Core Principles from NCUA Supervisory Letter 07-01
The NCUA Letter reflects on three core principles:
The NCUA has prescriptive contract standards that are aimed carefully, crafting the working relationship between your credit union and your third parties to protect the interests of the institution and its members.
While the NCUA seems to have taken the lightest examination touch of the major regulators, this shouldn't be a sign for complacency if you're involved in the risk management program at a credit union.
Also, since the NCUA guidance is aged, many of the more recent cybersecurity standards simply didn't exist in 2007, but you do need to make sure your institution is staying abreast of the best ways to protect your members' confidential information, even if the guidance itself is dated.
If NCUA guidance is dated, how do I stay ahead?
It’s been clear for many years that all the major regulators compare notes. In fact, all of them hold a voting seat at the table of the Federal Financial Institutions Examination Council (FFIEC), which has been around since 1979. One of the best ways to stay ahead of your examinations is to look for ways to model your program around the most stringent guidance, which is currently the FFIEC manual and the OCC Bulletins 29-2013, 7-2017 and 21-2017. If you're operating to those standards, you know that since the regulators are comparing best practices and even if your regulator has older guidance, you'll be at the forefront of activities.
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