The importance of vendor management systems for small and mid-sized banks

Every organization needs and uses vendors. Banks and financial institutions cannot afford any interruptions in their business, and making sure that vendors are being managed properly ensures that this risk is managed.

Vendors increase organizational risk

Vendor management systems are an important part of enterprise risk management, because vendors increase the risk exposure of the organization. Vendors are necessary – no modern business can operate without getting the right equipment and tools from vendors – which means that this risk needs to be managed as well as possible.

Understanding vendor related risks

Vendor risks are issues that affect the vendor and their ability to deliver your organization the services that it needs. The issue is that without a vendor management system, vital information can slip through the cracks, resulting in an organization being exposed to unexpected risk.

In a proper vendor management system every piece of information that can affect the vendor’s performance is quantitated. If a vendor is not consistent in delivering the services required it can be easily noted down within the system. All high-risk vendors can thus be identified, and the managers can identify other potential vendors to reach out to in case the risk becomes reality.

The easy way to find out if your organization needs a vendor management system is by asking two simple questions. One, can your organization operate without any vendors at all? If not, is your organization aware of the current vendor risks? Because if your organization, like most other organizations, is dependent on vendors yet does not know its vendor risks, then you need a vendor management system. Knowing vendor risks is necessary for enterprise risk management.

Audit based vendor risk management

Vendor management systems allow your organization to deal with vendors in a manner more systematic and efficient than it was previously possible. Vendors can be regularly audited and assessed, and all updated risk assessments are entered into the system. This gives your organization a data based approach towards quantifying and managing vendor risk. Vendor management systems allow stakeholders within the organization to assess vendors by looking at their audit history, and by adding information where needed.

These audits aren’t just about compliance and regulations – they are also about performance. Vendor management systems allow your organization to ask the vendors for better performance. Any recurring issues can be quickly identified and the vendors can be provided with actionable feedback. Since all the information about the vendors is present within one system, it is easy for management to see recurring issues.

Regional banks may have higher vendor risk than nation-wide banks

Vendor management systems are just as important for regional banks as they are for nationwide banks. They may even be more important, because the vendors regional banks deal with may pose a higher risk than the vendors nationwide banks work with. Smaller banks have smaller vendors, and smaller vendors often do not have the right systematic approach towards work. A proper vendor management system helps banks communicate better with vendors and allows the vendors to elevate the levels of their service.

Regional banks that take vendor management seriously reap the benefits of good vendor management such as reduced risk, a reduction in vendor related costs, better services from vendors, as well as better vendor contract management, and much more. The Predict360 vendor management system is perfectly designed for regional banks and financial institutions – see what it can do for your organization with a live demo or a free 30-day trial.

About the company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.

Remain up-to-date on industry news/updates through our Twitter & Linkedin profiles.