5 Things Every Vendor Owner Needs to Manage Vendor Risk Successfully

An effective vendor risk program depends on each stakeholder fulfilling their responsibilities, but this is often more easily said than done. Vendor risk management is a complex process with many interdependencies and moving parts. And, it’s not all that uncommon to see a breakdown in the process.

Consider a scenario where there is a disconnect between what your organization expects of vendors owners and what they deliver. A perceived lack of engagement and accountability from their vendor owners is a common complaint of vendor risk management teams. On the other hand, vendor owners frequently express concerns about heavy workloads, confusing processes and a lack of instruction regarding vendor risk management. If this sounds familiar to you, it might be time to change direction to reduce friction between vendor risk management teams and vendor owners, and to improve the overall function of your vendor risk management program.

Vendor owners bear considerable responsibility for managing vendor risk. But, without the proper education, processes, tools, resources and support, it can feel like a nearly impossible task. This blog will discuss the five things every vendor owner needs to manage vendor risk successfully.

5 Things Every Vendor Owner Needs to Manage Risk

1. Education

Your vendor owner may be an expert on your vendor's product or service, but that doesn't mean they are experts in vendor risk management. And, even if they’re familiar with vendor risk management, they may not be familiar with your organization's vendor risk management processes and practices. Every vendor owner needs to be educated on vendor risk management and receive practical instruction on how to complete those processes at your organization.

That education should be inclusive of:

• Recognizing the what: Every vendor owner should understand what vendor risk management is and what it looks like in your organization. Be prepared to educate your vendor owners on the following:
  
  1. Organizational structure and governance
  2. Roles and responsibilities
  3. Stakeholders
  4. The vendor risk management lifecycle including:
     
     • Planning for the vendor relationship
     • Vendor exit strategies
     • Risk ratings and criticality
     • Due diligence and risk reviews
     • Contracting and contract renewal
     • Risk and performance management and monitoring
     • Issues management
     • Vendor termination and offboarding

• Understanding the why: Don't forget to help your vendor owners understand the operation of vendor risk management and why it’s a required practice at your organization. Risk reduction, regulatory requirements, protecting your customer, cost savings, efficiency and best practices are great reasons your organization has a vendor risk management program.
• Executing the how: When you have your vendor owners clear on the "what" and the "why," they can move on to learning how to perform the process. You can ensure that your vendor risk management processes are accomplished correctly by providing practical instruction, process descriptions, flowcharts and standardized desktop procedures. Personal instruction and mentoring are also valuable tools for transferring knowledge to your vendor owners.

Providing your vendor owners with consistent and comprehensive education is key to a successful vendor risk management program. Keep these other tips in mind:

• Remember to provide documented instructional materials as part of your educational training because only explaining the process is insufficient.
• Make sure there’s a way to test vendor owners' knowledge of self-study materials and regularly update training for vendor managers to keep current on emerging risks and regulations.
• Ensure that all vendor managers are trained to the same standard once your educational program is implemented. Don't forget to create a mechanism to ensure all new vendor managers complete their training within a set timeframe (i.e., 30 days).

2. Documentation

At a minimum, every organization should have a detailed and well-written policy to outline the requirements of the vendor risk management program. Every vendor owner should read the policy. However good your policy may be, it will be more effective if it’s complemented with a program document that describes the processes and actions necessary to comply with the policy. Don't forget department-specific documented desktop procedures to ensure correctly executed processes.

3. Regulatory Guidance

Vendor owners in regulated industries need to be aware of and understand any regulatory requirements that apply to their vendors or the vendor risk management process. Encourage your vendor owners to sign up for regulatory updates through the regulator's website. Furthermore, vendor risk management teams should be prepared to explain to vendor owners how regulatory changes will impact internal expectations and requirements.

4. Tools and Resources

The best way to ensure vendor owner engagement and accountability is to make the process as easy and automated as possible. Having the right tools and resources in place can help you accomplish this goal.

Here are a few examples of tools and resources to have:

• Automated vendor risk management systems provide an excellent way for your vendor owner to keep track of their required activities. They also provide a single source of truth for vendor status, issues and subsequent process steps. These tools also provide the vendor with a place to upload and inventory requested documents or information and they remove the need to track multiple emails. Finally, automated reminders keep all stakeholders on task.
• Risk monitoring and alert services help your vendor owner keep their eye on vendor risk between formal risk reviews. These services can help monitor vendors' financial risk, cybersecurity posture, reputation and negative news.
• Online industry peer groups are an excellent resource for vendor managers. As well as being helpful, it’s also practical and cathartic to learn directly from others facing the same challenges and obstacles.
• Feedback channels allow your vendor owners to share their experiences, offer valuable opinions and voice any concerns they may have.

5. Teamwork and Support

Vendor risk management is a "team sport.” Your vendor owners can't do it alone. Vendor risk management teams are uniquely positioned to support the vendor owner's success.

Here are some ways to foster teamwork and support:

• Encourage regular communication among stakeholders. If your organization doesn't already have one, consider creating a vendor risk management committee for vendor owners, subject matter experts and vendor risk management to answer questions, discuss issues, solve problems and optimize processes.
• Hold office hours. Designate an hour or two each week as "office hours" specifically for vendor owners to get advice or ask questions. If the vendor owners know office hours are available, it eliminates the need for scheduling a separate meeting to discuss minor issues or ask questions; they can simply drop in or give you a quick call.
• Ask for feedback and follow up. When vendor owners are encouraged to speak up, it’s essential to make sure they feel heard. Responding to feedback is the best way to ensure lines of communication remain open.
• Walk a mile in your vendor owner's shoes. Many people are surprised when they learn they have additional responsibilities and duties relating to vendor risk management. After all, that detail is often omitted from the job description or added in later on. For some individuals, it can be challenging to plan and absorb the new "additional" workload, especially when they have a pretty full plate with what they consider to be their "real job" or primary duties. The best advice for vendor risk management teams is not to take these attitudes personally. And, don't assume that your vendor owner is merely trying to neglect their duties.

In conclusion, if you want to see your vendor owners successfully manage vendor risk, provide them with robust education, well-written documentation and regulatory awareness. Don't forget to ensure they have the right tools and resources at their disposal and reinforce the message that they can look to vendor risk management for teamwork and support. You can expect confident and successful vendor owners if you include these five elements in your vendor risk management program!