(270) 506-5140 CONTACT US
Login
Due Diligence

A Well-Known Vendor Doesn’t Mean It's a Safe Vendor

Oct 5, 2016 by Branan Cooper

You’re getting ready to do business with a huge industry leader. Why, there’s no need to try to do the usual due diligence, is there? They have to be safe.

I mean, they’re never going to give us the information we need, right, so why bother trying to collect much? Wrong.

Dead Wrong

Yes, I’ve heard that whole first paragraph many times, but it’s absolutely dead wrong. Bigger doesn’t mean better and no one is safe from risk, such as data breaches (remember Target?). You still should follow – to the extent you can – your normal due diligence process regardless of what the name on the side of their building says.

A recent study by BillingTree on Consumer Finance indicated that the top two areas of importance in signing a new third party are security and compliance. Being an industry leader or brand name fell WAY down the list.

In fact, being an industry leader may mean they try to play the "800 lb gorilla" game and not give up much information. But, it's important that you follow your process and document the effort. You should also be sure to keep your senior management team engaged and informed.

Effort Still Needed

Even if you're looking to work with an industry leader or well-known brand, you still need to put forth effort to get what information  you can. Find alternatives to what you can expect to receive – yes, that may be a concession you have to make, but your customers are counting on you, and your board and regulators are expecting you to still make every reasonable effort.

Don’t fall prey to the easy misconception that bigger means better – it just does not work that way. Due diligence and compliance are everyone’s responsibilities, regardless of size or scope.

Vendor Management Model Due Diligence Checklist 

Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

Follow Branan Cooper
Subscribe--Bg.jpg

Subscribe to the Venminder Blog