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Failing Suppliers?

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Question: 
Which supplier failures could cause significant impact to bank operations?
Answer: 

During this period of drastic economic changes, the risk of the bank's suppliers, vendors, and partners either failing or undergoing dramatic changes is real and dynamic. Understanding, monitoring, and managing this exposure is a daunting task that is beyond the time, resources, and capabilities of most banking operations. However, utilizing a risk based approach makes it possible to identity those critical 3rd party relationships that present the greatest exposure to the bank as well as enable the proactive (versus reactive) management of this risk. An efficient approach to identifying these relationships include:

  • Define the scope of discovery required by leveraging an existing inventory of vendor/third party relationships and identifying key contacts across the bank who can pinpoint key relationships
  • Leverage the findings of this discovery and utilize a "risk weighted" survey of exposure to quantify and rank the risk of exposure in general and to specific third party relationships
  • Utilize the results to craft a more detailed risk assessment, management and monitoring program



First published on BankersOnline.com 5/25/09

First published on 05/25/2009

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