Is your appraisal workflow and vendor management system in-line with your financial institutions interconnected strategic initiatives? Linda Tuck Chapman is the author of Third-Party Risk Management, Driving Enterprise Value. It’s an excellent read for those in the strategic relationship space working to provide financial institutions with more opportunities to innovate. In the book, she highlights that third-party relationships facilitate banks’ creation of competitive services and products to identify new markets and leave unprofitable lines of business.
The key is to understand and access top talent, technology and processes that streamline, automate and improve internal processes. This serves to reduce operating costs and its multi-dimensional benefit, contributing to a significant increase in enterprise value. That said, third-party relationships need to provide what they were contracted for, while at the same time, operate with safety and soundness.
Financial institutions have numerous third-party relationships, essential for daily operation. These firms can directly affect operations, financials, competitiveness and customer relationships. A successful relationship with an effective strategic third-party vendor, if done correctly, can substantively improve your institution’s reputation. This brings up the question. Do you have the right people in the right seat in your credit department? Do your internal processes work seamlessly providing competitiveness while de-risking the bank?
Ms. Chapman says it well, “Effective third-party risk management can only be achieved when there is a risk centric “tone at the top” corporate culture combined with sufficient investment and expertise, processes and tools; experienced people who work well together, and sufficient time invested by senior management and the board and governance activities.” Do your third-party vendors go the extra mile?