Share In May of 2024, the Office of the Comptroller of the Currency (OCC) published a guide aimed at helping community banks manage third-party risks more effectively. This resource emphasizes the importance of a comprehensive approach to third-party risk management, which can help banks mitigate potential risks while reaping the benefits of external partnerships.
Key Takeaways from the OCC Guide:
- Risk Identification: Banks must thoroughly identify potential risks when engaging third-party vendors, including operational, reputational, compliance, and strategic risks.
- Due Diligence: The guide highlights the necessity of conducting robust due diligence before engaging with third parties. This includes reviewing vendor history, financial stability, compliance with regulatory standards, and operational capabilities.
- Ongoing Monitoring: Continuous oversight of vendor performance and risk exposure is critical according to the OCC guidelines. Community banks should strive to manage all possible risks throughout the vendor relationship lifecycle.
- Contract Structuring: Clear, well-defined contracts are essential to manage expectations, outline responsibilities, and protect the bank from potential legal or compliance issues.
- Risk Mitigation: The OCC encourages banks to adopt risk mitigation strategies, such as establishing strong internal controls and contingency plans in case of vendor failure.
- Board and Management Oversight: Effective governance requires active oversight from the bank’s board and senior management to ensure third-party risk management practices align with overall risk management strategies.
How Vendorly Can Help You Meet the OCC’s Guidelines
Vendorly is well-positioned to assist community banks in addressing the OCC’s third-party risk management requirements by offering a comprehensive, tech-driven solution for vendor oversight. Here’s how Vendorly supports the guidelines laid out by the OCC:
- Risk Identification and Due Diligence: Vendorly provides a centralized platform to streamline vendor vetting processes. With its robust screening tools, Vendorly helps banks conduct thorough background checks, compliance assessments, and financial evaluations, helping flag potential risks before engaging with a vendor.
- Ongoing Monitoring: Through Vendorly’s continuous monitoring capabilities, community banks can track vendor performance, compliance status, and risk levels in real-time. Automated alerts notify banks of any changes that might impact the vendor relationship, helping create a proactive risk management process.
- Contract and Compliance Management: Vendorly simplifies contract management by storing and tracking key vendor agreements in a secure repository, helping community banks track the terms, responsibilities, and service level expectations of a given contract. The platform also helps community banks remain compliant with industry regulations.
- Risk Mitigation Tools: Vendorly offers solutions to mitigate risks by helping banks establish internal controls and audit frameworks. These tools can help banks respond swiftly to any compliance or operational issues that arise during vendor relationships.
- Board and Management Reporting: Vendorly’s reporting features provide detailed insights and analytics on vendor risks, helping senior management and the board make informed decisions. By offering clear, actionable data, Vendorly supports the board’s oversight role in third-party risk management.
By leveraging Vendorly’s suite of vendor management tools, community banks can have another powerful tool in their arsenal to help them meet the OCC’s third-party risk management guidelines efficiently and effectively. To view the OCC guide for community banks, click here.
For more details on how Vendorly can support your bank’s third-party risk management efforts, visit vendorly.com and schedule a free demo today.
