Business today is complex and extremely competitive, with the global and local boundaries blending into each other all the time. In order to survive, expand and compete it has become imperative for businesses to form third party relationships with various suppliers, vendors and external agents. Also known as channels, these third party entities have their pros and cons. While they have made business management easier, they have also increased the risk for information leakage and data breaches in recent times. Third party management is therefore of prime importance for businesses, not only to control the business flow but also to prevent any information breach associated with multiple vendors.
It is no surprise therefore that the federal government has issued a series of regulation in the past decades to control these vendor relations. It is imperative that companies learn these and keep up with the changes to ensure full compliance at all times. Before any new vendor is signed up, it is important to assess and do due diligence so that the channel partners can be screened and monitored for the above mentioned risks associated with third-party relationships. As to why this is important, well these relationships bring a lot more elements into the equation which has inherent compliance, reputational, and financial risks.
A proactive approach to prevent these from happening means constant management through screening and monitoring them throughout their engagement. It is absolutely essential that businesses and financial institutions practice effective risk management and ensure that their activities are always performed in a safely and in compliance with all relevant laws. This will enable companies to identify, analyze, reduce and monitor the risks presented by relationships with multiple vendors, suppliers, other third parties. Sophisticated and integrated programs have allowed clients as well as vendors to focus on risk mitigation, reduce administrative tasks, get better channel coordination, drive down overall cost and achieve greater consistency in information management.
Effective training sessions that include the best practices for a compliant 3rd party oversight program is great tool to incorporate for the business. A third party management system helps build and manage totally compliant programs that will meet all GLBA 501(b) requirements and FFIEC Guidance. Along with the companies themselves, third parties are also educated in the procedures, policies and regulations which they need to comply with. It will help them identify what impacts their behavior and how they can effectively reduce risk.
Compliance Education Institute (CEI) is a New Jersey-based training and education company which specializes in third party management programs.
