Published May 13, 2022 • 4 minute read
However, a well-constructed, third-party management process creates streamlined protocols that mitigate hazards and maintains compliance through careful assessment, from the initial screenings to project completion.
What Is Vendor Risk Management?
Vendor risk management is the multifaceted process by which organizations vet potential third parties’ qualifications, assess risks, and track compliance throughout the business relationship.
When implementing a consistent and effective risk management strategy, we suggest organizations follow these five key steps:
Implementing a Vendor Risk Management Strategy
1. Begin With Smart Vendor Selection
The simplest way to proactively mitigate vendor risk? Ensure you’re selecting the right vendors from the start, through a comprehensive assessment process. Some third-party management solutions feature automated requests for proposal (RFPs) capabilities, enabling you to compare pre-qualified applications alongside each another to help you select the ideal candidate for a job posting.
In this beginning phase, it is also essential to outline an overall risk management plan, including any policies for third-party risk exposure, as well as a framework for assessing and responding to non-compliance. Some businesses might prefer to modernize their vendor management process and invest in automated certificate of insurance (COI) tracking software to streamline operations and avoid manual tasks.
Whether automated or manual tracking is right for your organization, it is crucial to roadmap the specific policies, procedures, and surveillance methods at the very beginning to ensure streamlined workflow and consistency.
2. Create a Standardized Onboarding Process
After selecting the right vendor(s) for a project, it is time to onboard them into your records system. You’ll need to log basic individual and affiliated business information; conduct health, safety, and financial screenings; and collect COIs and other documentation.
Your internal team manually tracks such information through third-party management processes. However, an automated COI tracking solution negates the need for myriad paperwork during this stage, streamlining onboarding via an online software solution or convenient app.
3. Establish Contractual Standards
Although your organization might possess reference templates, the unique posture and status of each vendor—determined through risk management and onboarding processes—will require specific contractual terms. Therefore, it is essential that with each new relationship, you reflect this by adding and subtracting clauses appropriately, and maintain standard review protocols to ensure both parties understand policies before making an agreement.
4. Maintain Due Diligence & Monitoring
After the initial onboarding, COI collection, and contract finalization is underway, it is best practice to maintain due diligence by monitoring third-party behavior for any non-compliance. Whether ensuring COIs are up to date or remaining vigilant against costly claims, it is crucial to safeguard against risk factors that could ultimately reflect poorly on your organization.
This can be achieved manually or through automated tracking software—the latter detecting COI inconsistencies and expirations as they occur, providing full visibility into third-party risks and quick compliance correction.
5. Create Auditing & Reporting Processes
To guard against non-compliance and other risks, companies can nurture a robust internal auditing and reporting process that highlights document expirations, inconsistencies, risk assessments, and more for complete transparency and understanding.
This regulatory requirement is especially useful for businesses that do not utilize automated software, enabling full visibility into potential risks and empowering businesses to bring wayward vendors back into compliance.
Benefits of Automated Third-Party Management
By adhering to a standardized risk management process, businesses can streamline COI tracking, mitigate potential hazards, and proactively guard against costly claims.
Rather than sacrifice hours of productivity through manual compliance maintenance, businesses should leverage the cutting-edge automated solutions available, facilitating real-time compliance insights, easy communication, and more.
While there are a number of software solutions on the market, few possess the multifaceted risk management capabilities of Business Credentialing Services (BCS). Providing real-time COI tracking, automated requests for proposal (RFPs), easy onboarding, and more, our solution helps businesses implement robust vendor risk management strategies that save time, money, and peace of mind.
BCS is one of the leading vendor management solutions on the market, offering self-service and full-service COI tracking, compliance monitoring, easy streamlined onboarding through the BCS App, and much, much more. Contact us today.