Vendor due diligence is one of the more complex vendor risk management (VRM) activities. Sending vendor questionnaires, gathering due diligence documents, and engaging the right subject matter experts is a time-consuming process — especially when multiple vendors need to go through the due diligence process.
There’s a better solution that requires less time and manual effort.
Outsourcing vendor due diligence to a qualified VRM software and solutions company allows organizations to more effectively manage vendor risks. Your organization can increase the number of completed vendor reviews with faster turnaround times and less employee resources. This helps increase capacity, shorten onboarding times, and improve the due diligence process.
Remember, although you can outsource due diligence document collection and review, your organization ultimately determines vendor criticality, sets your risk appetite, and approves or rejects vendor relationships based on risk.
Many VRM programs face staffing challenges. When your program is understaffed, it just takes one issue with vendor onboarding to create a backlog of work.
Smaller teams may also face a shortage of available subject matter experts (SMEs). It’s important for a qualified expert to review the vendor’s risks and due diligence documentation. Your SMEs may have heavy workloads and competing priorities, delaying vendor risk assessments.
Ultimately, VRM teams need to focus on more strategic work, like risk assessing vendors, managing issues with higher-risk vendors, and addressing complex problems that may arise from the vendor due diligence process.
How outsourcing vendor due diligence helps maximize resources:
Related: What is Vendor Onboarding Software?
VRM programs span a broad spectrum of maturity. Your organization’s program may be building a program from scratch, refining existing processes, or maintaining a well-established framework.
If your organization’s VRM program is still in its early stages, you may face challenges like limited experience and inconsistent execution. Employees may not be qualified to review a vendor’s risk and control environment. Vendor due diligence processes may be underdeveloped, leading to gaps in your vendor inventory.
Even mature VRM programs can struggle with requesting or tracking due diligence deliverables. This can lead to last-minute efforts to complete assessments on time, increasing the risk of missing issues or documentation.
Regardless of program maturity, issues in the vendor due diligence process lead to a reactive culture. Employees spend time chasing issues instead of proactively managing them.
How outsourcing vendor due diligence enhances VRM maturity:
Related: How Outsourcing Benefits Both New and Maturing Third-Party Risk Management Programs
As a financial services organization, you face stringent regulatory requirements. It’s important to assess vendor compliance and ensure they understand and follow your organization’s regulatory requirements. After all, you can outsource the product or service, but your organization can’t outsource the risk or responsibility.
However, regulatory requirements can be difficult to assess and understand.
How outsourcing vendor due diligence meets regulatory expectations:
Related: 6 Techniques to Manage Third-Party Compliance Risk
Outsourcing vendor due diligence provides many benefits, including added capacity, scalable processes, and the right subject matter expertise. It ensures your organization has the right resources on hand to identify and assess each vendor’s risks.
Outsourcing doesn’t replace vendor oversight — it strengthens it. With the right partner, your organization maintains proactive vendor risk management.
See how Venminder’s due diligence services can help your organization.