NYBA endorses Trust Exchange as exclusive solution for Vendor Management Compliance Monitoring for Banks.
Diversified Members Credit Union, the official Credit Union of the Detroit Lions chooses Trust Exchange and Auditlink to manage their vendor compliance program.
Trust Exchange welcomes Frankenmuth Credit Union as a customer for our vendor compliance monitoring application.
Risk managers everywhere cite lack of vendor engagement as the #1 challenge in 3rd party compliance. Just as customer success begins with the sales process, so does the compliance success of your vendors begin with their introduction to your program.
At a certain point in my military career, I was made to sit through an extremely dry and soul-sucking class on the process of classifying information. Without going deep into that torture, I’ll sum it up with a statement that may seem counterintuitive.
“When possible, produce information that is usable by the largest possible audience.” In other words, “don’t produce classified information that nobody will be able to use.”
Trust me. This is the hardest lesson to teach. Top Secret information is sexy. It feels powerful to produce it and to control it. But, producing information that is classified (at any level) often makes it useless. Why? It’s quite simple. Information, data, intelligence, whatever you want to call it, has no value without application. Information only has value when it can be consumed. It’s like growing a garden of fresh vegetables, then never harvesting and eating them.
Businesses of all sizes, throughout all industries, make the same errors every day. I understand, the competition is ruthless and is always looking to take some market share. Even non-profit organizations are in competition. Why would you ever want to share information with a rival? I’m going to begin my answer with an example. When casinos catch a cheater, what do they do? They quickly notify all their competition throughout the region. Why would they do this? The cheater won’t do any more damage to their business. Why not let the cheater go wreak some havoc at the competition’s Blackjack table? You know the answer, because passing that information quickly and efficiently helps to keep the industry healthy. When it comes to reporting cheaters, there is a high level of trust between competitors.
“Information only has value when it can be consumed.”
The business world needs to change its perspective. Nobody is telling you to give up a competitive advantage – that’s what the government does when you don’t properly nurture your industry. Ask yourself what information your organization collects, that when freely shared, will not put your company at a disadvantage to the competition, but protect the health of your industry. You could start with your vendors. In certain industries, especially pharma, credit unions and community banking, the vendor overlap between two randomly selected organizations is surprising. Reduce that list to critical vendors or high-risk vendors and the overlap becomes worrisome. We have the data, and we’re watching entire industries are put many of their high-risk eggs in the same baskets – a trend that does not statistically bode well over time, yet it exists. There’s an opportunity here though.
“Business information has NO value without application.”
If the organizations in an industry contract with many of the same critical vendors or high-risk vendors, does it make sense to share certain information with the industry? We think it does. It's not a complete list of possibilities, but consider the following possible events and conditions:
· An investigation for fraud or bribery
· The sudden departure of a CFO
· Continuous failures to meet compliance requirements
· A lawsuit
· The unexpected loss of a critical client
· A failure to maintain an overall industry reputation (falling out of favor) *
· A failure to keep up with industry innovation *
I put an asterisk next to the last two examples because they fall more to the subjective side of the business information spectrum – extremely important data that needs to be included in any system of business information. Look at the list again. Concerning a common vendor, is there any item on the list that would compromise your competitive advantage? I’ll argue with you later, but the answer is no.
What happens when you do share this information with your industry peers? What are the positive outcomes for client and vendors?
Positive Outcomes of Sharing Selected Information with Other Industry Participants
· The company’s reputation is improved in the peer-group.
· Disruption of business due to vendor failure is less likely.
· The industry’s reputation, in the eyes of the public and regulators, is improved.
· The quality of the vendor pool is improved.
· Vendor compliance costs are distributed throughout the industry.
· Vendor responsiveness to checklist requirements is increased.
· Reliance on 3rd-party information brokers is reduced, resulting in saved expense.
Positive Outcomes for Vendors when Performance Information is Shared
· Top performing vendors are rewarded with improved reputation, resulting in increased business.
· The vendor pool is compelled to maintain a high level of quality.
· A vendor’s awareness of reputation in increased, allowing them to better manage the market’s perception of their product or service.
· The vendor’s ability to observe and respond to market needs is increased, allowing them to remain competitive.
The biggest problem with most of the vendor management platforms is that they do NOT allow the sharing of important business information between industry peers. At the same time, they also do not allow the vendor to actively maintain their profile within the platform. They all essentially do the same thing, display the data that you already have. Trust Exchange made the decision to break this trend by applying social technologies to your business information/compliance program. Now, you have a choice. You have the choice to share business information or not. You are also now able to discover what everyone else is reporting about your critical vendors and high-risk vendors.
It’s time to adjust your perspective. Ask us how we’re different.
What is the difference between vendor management and vendor monitoring? Is vendor management a subset of vendor monitoring? Or is vendor monitoring a subset of vendor management?
The viability of any given company, varies over time and can be impacted by many things including their performance, business cycles and the political environment. Understanding the ebb and flow of a company’s business is key to understanding their viability.