The FDIC issued a consent order against Discover Bank last year for lacking oversight into third-party risk management and a compliance vendor management program. The time is past for all financial institution leaders to heed this message, take a hard look at their vendors and highlight concerns to their boards of directors.
But with so much information being gathered within an institution, what should CEOs share?
Smart bank leaders ensure their teams create and maintain scorecards to monitor their vendors’ performance and schedule regular updates with their directors. This empowers both the institutions and their boards to stay ahead of any concerns with vendor performance.
At a minimum, vendor performance scorecards should include these categories:
Vendor performance scorecards play a critical role in helping an institution’s team decide which vendors to renew, renegotiate or replace. Smart CEOs know scorecards demonstrate to the board that the team is not just managing vendor risk but lowering it.
Thanks to Josh Layne for his contributions to this article.
John Meyer is a managing director at Cornerstone Advisors. Follow John on LinkedIn.
Kelli Schulz is a principal at Cornerstone Advisors. Follow Kelli on LinkedIn.