Use Case: Vendor Governance

Introduction

Businesses rely on more and more vendors as they continue to shift focus to core competencies and reduce depth in value creation. This does not reduce or increase risk in most cases – it simply reallocates risk to different categories. What used to be a risk in operating IT now becomes a vendor risk, third party risk or outsourcing risk – depending on the terms used in your organisation. A scalable option to identify and evaluate risks resulting from working with vendors is an important capability for many of Alyne’s customers where we have observed some common challenges and success factors.

Common Challenges

• Focus on Perfect Assessment
  Much time is spent in reviewing and agreeing the perfect assessment with all involved stakeholders. The output can be a lengthy process with questions that have a “design by committee” quality. We suggest rapid iteration and generating quick assurance value instead.
• Unclear Consequences
  Some vendor assurance or third party risk processes are executed as a “tick the box” exercise, with unclear consequences for identified risks. If thresholds for mitigation and ending the vendor relationship are not defined, the outcome of the process is incomplete.
• Manual Analytics
  Most third party or vendor governance processes still involve a significant aspect of manual analytics to understand the output of a potentially large number of assessment results. Automating both analysis and insights is a key to process success. 

Success Factors

• Generate Deep Insights Quickly
  Ask questions that allow insight beyond the immediate question. A great way of doing this is providing multiple unique answer options. This method can replace multiple questions with one.
   
• Build Relationships
  Enable collaboration throughout the assessment with your vendors. They need to be on your team and close communication can be a great tool to achieve this.
• Focus on Risk Portfolio View
  Viewing each vendor individually can be relevant for making decisions specific to that vendor, however risk exposure is often only revealed in a portfolio view. Analyse the risk exposure across multiple vendors from various perspectives to gain a better understanding.