Why Continuous Vendor Risk Management Improvement Is Needed

In the 2014 film Whiplash, J.K. Simmons plays a jazz teacher at a prestigious music conservatory who is viciously critical of his students who aren't performing to his standards. In one scene, he gives a poignant quote on mediocrity, saying, "There are no two words in the English language more harmful than good job."

While most filmgoers would probably agree that his teaching method is extreme, there is some truth in the notion that a "good job" can give a false sense of security, especially regarding your third-party risk management program. According to our State of Third-Party Risk Management 2022 survey, 41% of respondents stated that their policy/program was established, but needed improvement. Vendor risk management programs are never perfect, but continuous improvement gets you closer to that goal. This blog includes several valuable tips that will help you improve your program.

3 Benefits of a Mature Vendor Risk Management Program

First, let's examine why vendor risk program maturity is essential. Here are just three of the benefits:

1. Satisfies your regulators – If you're in a regulated industry, you're already aware of the expectations around vendor risk management, such as the need for the board and senior management to be involved. However, regulators expect to see more than the bare minimum when it comes to managing vendor risk. A proactive approach to program maturation will help satisfy even the most critical regulators.
2. Improve your processes – Vendor risk management may seem overwhelming and complex. Still, a mature program ensures that the processes are consistent and straightforward. Streamlined workflows will save time and ensure high-quality vendor risk management deliverables.
3. Supports objectives – When it comes to vendor risk management, every organization has its own strategic and business objectives. Some organizations may need to focus on cost reduction, while others require vendors to provide specialized products or services. With the help of a mature vendor risk management program, you can achieve these objectives.

How to Improve Your Vendor Risk Management Program

Perhaps your vendor risk management program is already up and running, but you realize that you have been settling for "good enough." What can you do to improve? Consider these suggestions:

• Invest in automation – Manual processes are prone to human error. Automating workflows and reporting can significantly contribute to the maturity of your program.
• Promote innovation – Most organizations can’t compete without innovation and will not thrive without it. In addition, you should apply this innovation to your vendor risk management program to evaluate any new ideas and changes you might be able to make.
• Consider outsourcing – Certain vendor risk management activities can be effectively outsourced, resulting in reduced workload and the potential for cost savings.

When you think about all the great innovators and artists throughout history, you may find that they adopted a continuous improvement mentality, rather than settling for an unexceptional “good job.” Likewise, a mature vendor risk management program will require continuous improvement to keep up with business changes, emerging risks and regulatory expectations.