Onboarding and Terminating Third Parties
Onboarding of new third parties is a key process for the firm and implementing procedures to ensure that the correct third parties are on-boarded is critical. It is an important part of your third party risk management program. It needs to be implemented consistently across the organization and this consistency is key to the long term evolution of your program.
Termination of the relationship with a third party is also very important and is often a focus for regulators. There are business processes focused on the addition of new vendors but the processes on termination often receive much less attention. Firms should have processes in place to identify when and how third parties should be terminated and to ensure completion of the procedures associated with the proper termination of the relationship. Again, to ensure consistency, these processes should be automated across the organization.
Onboarding and terminating third party vendors is only one part of an effective third party risk management program. Click below to learn more about the other essential elements of a third party vendor risk management framework.
Third party data and contracts repository
Overcoming data dispersion to create a single integrated data pool is vital.
One of the principal challenges initiating the process to more effectively manage your third parties is the probable dispersion of
Missing third party data
It is highly probable that you will not have all the data you need from internal sources to conduct your risk assessment on the third parties. You will need to be sure that your platform is capable of gathering data from multiple external data sources.
To learn more about the different external data sources you will need, click here.
Risk scoring and assessment
Consistent risk assessment, scoring and classification are foundation activities.
Once you have your initial data about the third party, it is time to assess the risk and assign a risk classification to each vendor or third party. You will need to be methodological in your approach as regulators are expecting to see a robust, well-designed structure.
Third party due diligence
This part of the process requires deeper dives into areas of risk such as IT security, financial stability, corruption and bribery etc.
This is accomplished through multiple activities including the use of in-depth questionnaires, the screening of third parties against external databases such as World-Check, Dun and Bradstreet for financial standing and the scheduling and documenting of activities such as on-site visits, phone interviews etc.
Oversight, reporting and analytics of third parties
Good oversight delivers better management and program control.
Issue and case management of third parties
A robust solution must be able to handle and help you to resolve your issues and cases.
When you are classifying the risks and conducting due diligence you also need a robust system that can manage those occasions when a supplier or third party does not meet the standards set out in your policy documents.