Best Practices in Financial Services Vendor Risk Management

The largest banks and credit card companies can have close to 50,000 suppliers[1]. And with security breaches on the rise, financial services organizations must look beyond their own systems and processes to scrutinize the risk profiles of their vendors.

Without a strategy in place to vet third-party partners and suppliers, your organization could face substantial compliance risks. The solution? A vendor risk management process that allows your organization to prioritize vendors based on their posed risk and apply the right mix of controls, policies and procedures to manage risk assessments, due diligence and response. By instituting a vendor risk management program, your organization can build a stronger defense — as long as the program focuses on the right components.

 

Common vendor risk pitfalls: What elevates your risk posture? 

Implementing a financial services risk management program can be challenging, as failing to cover every base can leave the door open to security threats. Even in established programs, common weaknesses include:

  • Lack of oversight by leadership
  • Absence of a documented outsourcing policy
  • No standardized process for vendor performance reviews and cybersecurity procedures
  • Too-vague vendor contract terms and requirements
  • Antiquated, manual risk management tools and processes that limit visibility

 

Transforming the way the financial services industry manages vendor risk 

ServiceNow Vendor Risk Management transforms inefficient processes into a unified vendor risk program — one that takes a deliberate, comprehensive approach to mapping exposures through vital reporting of vendor risk and issues, a prioritized and consistent remediation process, and automated assessment procedures. A key differentiator for ServiceNow is that our Vendor Risk program can stand alone or integrate with our Governance, Risk, and Compliance (GRC) portfolio. In such a heavily regulated industry, GRC is an important ally in keeping regulators happy.

By aligning your vendor risk management with your enterprise-wide priorities, you can:

Reduce risk exposure —  Monitor risks and issues in your vendor environment, and assess the impact to the organization’s risk posture.

 Respond in real time to high-risk vendors — Easily identify critical vendors and high-priority issues with dynamically generated risk scores.

 Leverage a unified platform — Speed up assessment, scoring and risk prioritization of vendors by using GRC indicators and vendor risk scores.

 

Keep in mind, vendor risk is just one part of the ServiceNow® Governance, Risk, and Compliance (GRC) portfolio, which unifies processes enterprise-wide to streamline and strengthen your organization’s defense:

Vendor risk management — Continuously monitor, detect, assess, mitigate and remediate risks in vendor ecosystems

Policy and compliance management — Automate and manage policy and compliance lifecycles, and track compliance activities

 Risk management — Enable fine-grained business impact analysis and continuously monitor critical controls

 Audit management — Use risk data to scope and prioritize audit plans, and automate cross-functional and audit processes

 

With ServiceNow supporting your GRC needs, your financial services firm will be armed with the resources necessary to enhance controls, respond to regulatory requirements and create a proactive risk defense strategy.

 

Want to learn more? Download the eBook 3 Keys to Managing Vendor Risk in Financial Services or view the infographic.

 

[1] McKinsey & Co

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Laurie Ehrbar
Laurie Ehrbar has over 20 years of marketing experience and has held senior management positions in banking, brokerage and asset management organizations. She has worked for or with some of the biggest brands on Wall Street like Citigroup, TD Bank and UBS Securities to name just a few. Laurie is currently the Global Program Director, Financial Services, for ServiceNow.

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