Hello everyone and thank you for joining me today for our Third Party Thursday podcast. I’m Mike Campbell, CFO here at Venminder. Today we will discuss an element of budgeting for 2019. We’ll cover some of the reasons for a third party risk management budget.
Remember, if done right, third party risk management is a strategic advantage. It’s an expense but also the best way to defend your company when risk is posed. Therefore, budgeting for this area is critical. Let’s go through 10 specific reasons:
- You need to follow regulatory guidelines.
- Having a robust third party risk management program drives real efficiency and real results.
- It prepares you to anticipate and to be responsive to problems when they happen.
- It ensures you’ll sign on good business partners who will support your objectives.
- You’ll drive down costs by identifying expense risk and have ways of comparing providers in an effective selection process. Third party risk management helps identify and consolidate, or completely eliminate, duplicate use of vendors by different lines of business.
- You’ll produce good exit strategies should problems arise, and you’ll develop methods of ensuring contractual commitments are kept.
- Your senior management team and board will understand and support solid business decisions that emanate from the work of third party risk management.
- You’ll help your institution avoid missteps of your competitors and you won’t need to be concerned with costly investigations or enforcement actions.
- You’ll ensure customer satisfaction. Through vendor oversight, you monitor service levels and confirm they are being met as well as other vendor items such as SOC reports to ensure proper controls are in place.
- Your reputation will be that of a well-managed and strategically sound company.
- To get everything done for third party risk that benefits the institution, you need to ensure you have the right amount of resources. Whether it’s increasing your full time or part time employee staff or outsourcing in 2019, you need the ability to do so to make sure the job is done correctly.
This list of reasons is not an exhaustive list as there are certainly many more reasons for a third party risk management budget. However, as you can see, it’s very important to consider your third party risk management department/program when determining priorities budgeting for the upcoming year.
I hope you found this podcast helpful. Again, I’m Mike Campbell at Venminder. If you haven’t already done so, please subscribe to our Third Party Thursday series.