It is your organizations responsibility to perform vendor due diligence reviews. In some industries (banking and others) it is vital that vendor due diligence reviews are carried out or there could be fines and other sanctions imposed by regulatory bodies. Of course, regulatory bodies are not the only concern, a vendor’s failings can easily soil the reputation of your company and result in a lost client base.
The Review Process
There are three things that every firm should be considering when it comes to their due diligence reviews, policy and programs:
-
The training
-
The introduction of the due diligence process to the vendor
-
Future reviews
The first order of business to ensure that your reviews comply and will help to control risk is to get your team the training that they need. Once the training is out of the way, then designing the program can start. The right training will reveal key aspects of a good review plan.
Introducing your requirements to the vendor should occur when there is request for quote (RFQ) or a request for proposal (RFP). Setting clear parameters in the early stages of contract award and closely monitoring performance at this stage can be a good indicator of future performance.
Future Reviews
The right training will cover when there should be additional reviews to ensure vendor compliance. Some suggestions for additional reviews include:
-
When the vendor changes management. A change in management can mean a change in processes and policies that are not in compliance with your organizational requirements.
-
When there has been a legal action filed against a vendor, additional review is in order. Even when the action does not necessarily impact your firm, it is a good idea to take a second look at a vendor to ensure there is not a compliance issue that will affect your organization down the road.
There is a range of due diligence review concerns that are important to recognize. The right training is critical. Compliance Education Institute can help!
