In a perfect world, we’d be able to obtain every single document or everything we request of the vendor and it would be done with a speedy turnaround. However, in third party, risk as most of us know, it doesn’t always work like that.
So, what do you do when you’re stuck in a predicament like this? Maybe the vendor doesn’t have a SOC report, yet they should. Or, maybe the vendor is a private company who refuses to share their financials.
Due Diligence Document Alternatives
Good news! You’ve got options. Let’s discuss:
- Issue: The vendor is a private company and won’t share their financials.
Alternative 1: Discuss with your team and see if you can accept a different type of document such as an accountant’s statement.
Alternative 2: You could hold a conference call with them and ask questions like the following to help understand their financial health:
- What does your revenue look like?
- What are your capital plans over the next 12 months?
Alternative 1: Ask them if you can come on-site to discuss.
Alternative 2: If an on-site visit isn’t an option right now, ask them to share some of the information via an online sharing platform like Webex.
3. Issue: The vendor won’t provide their business continuity plan or disaster recovery plan.
Alternative 1: If the vendor won’t provide a hard copy then you can ask them to host a Webex session so that you can view it without keeping a physical file.
Alternative 2: You could request they provide a heavily redacted copy.
4. Issue: The vendor won’t provide a SOC report.
Alternative 1: Sometimes if it’s not in the contract then the vendor won’t provide a SOC report. So, first and foremost you should try to write it into the contract upfront. If you didn’t, then try to write it into the contract renewal.
Alternative 2: You could provide a short control environment questionnaire to them to answer or ask for a supplementary document, if any, that they can share.
5. Issue: The vendor won’t let you review results of a recent audit:
Alternative: In some industries you can request the results through your regulator’s office (e.g., banks, credit unions).
After That
If a vendor will not release a sensitive document that you need to analyze, then you may need to raise their risk rating or seek a new vendor. Remember, one of the most important things you can do is document all of your attempts. Show your regulators that you’ve tried and exhausted all options.
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