Do you trust who you do business with? How about who they do business with?
People naturally gravitate toward a trusted network of business associates. They know, with a reasonable amount of certainty, that the associates will help them be productive and ultimately, help bring in as much revenue as possible.
Third and Fourth-Party Vendor Risk
It’s a much different matter when third and fourth parties come into play. You can’t pick and choose these vendors—unless you dictate to your business associate that they terminate a partnership— yet they have the potential to put your business at risk just as much as your own vendors do.
These third and fourth parties are business blind spots. Remembering they are there, and how much risk they pose, is difficult for the very reason that they are inherently hard to see.
The OCC has stated that financial institutions must categorize these vendors/subcontractors, and measure the amount of risk they bring.
Despite these risks and legal rules, EY’s 2016 Global Fraud Report stated that one in three surveyed respondents “did not assess country or industry-specific risks” before investing in a third party.
This is concerning. Price Waterhouse Coopers (PwC), a trusted advisor in the banking industry, stated in their report Addressing the Risk of Your Fourth Party, that performing due diligence on these vendors and their “downstream stakeholders” is an “operational necessity.”
Besides the obvious problem of misconduct, there are potential legal ramifications and reputational risks resulting from a third or fourth party breach of trust.
The solution to the vendor risk problem? A trusted financial-industry network that is easily scalable and includes access to business partners as well as third and fourth parties.
Scaling a Trusted Network is Vital to Financial Institutions’ Success
To build a company, you need vendors. Arguably, the more vendors and/or subcontractors your business has, the more efficient and successful it could be.
When a company scales up, increasing the number of employees and customers, and therefore their ability to do business, inevitably, they also increase their vendor partnerships. Indeed, a good partnership has the potential to bring in as much or more revenue than a current customer base.
With more vendor partnerships come more third and fourth party vendors—and thus more vendor risk. Scaling trust along with the network is vital for a financial institution to succeed and keep risks low.
ATS Secured can help you scale your financial network. We can help you know that your business relationships, and subsequent vendors, are compliant with regulations and trustworthy partners.
We do this by first verifying the vendor’s identity on the ATS Secured Platform, ensuring they are who they say they are. When you know you can trust the company or individual, you can move on to measuring their actions, procedures and policies to be sure they are compliant.
Customizable reports allow you to vet vendors, and document sharing and e-signature abilities let you invite them into the process and provide necessary due diligence—all easily stored in one place. You’ll even be alerted when vendor certifications expire and need updating. Other automations such as audit trails and banking industry best practices can help create your trusted network.
It’s easier than ever to scale your network and keep risks low at the same time. In fact, it’s vital to do so to keep your business growing. Contact us today and schedule a demo, to find out how it can work for you!