Organizations have seen a steady increase in the use of third-party service providers. Not knowing if the risks associated with third-parties are being managed properly intensifies risk management challenges and keeps board members awake at night. These risks demand steadfast supervisory focus as well as effective programs to manage each organization’s Third-Party Risk. The OCC’s recent Semiannual Risk Perspective publication highlights the urgency to address these risks.
In some organizations, systems have not kept pace with the increasing complexity of the regulatory and risk environments in which they operate. Internal quality and risk assessment processes are often poorly defined, lack documentation and do not provide traceability to appropriate regulations. Lack of seamless traceability and dependency tracking make it difficult to ensure that appropriate mitigation steps are outlined and executed. Failure to do so could have negative impacts on the effectiveness of compliance risk management systems to ensure regulatory compliance.
Increased compliance costs and resulting pressures on earnings, mergers and acquisitions, place escalating demands on already strained compliance risk management programs. With shrinking budgets and talented resources in great demand, organizations are facing mounting operational and compliance risk exposure.
The shortage of compliance skills and the risk of resource turnover is becoming an almost insurmountable challenge. Management must address the risk exposure associated with the challenges to preserve appropriate compliance expertise to manage the process, understand the risks and deal with complexities while also managing the risk. Finding a partner who has knowledgeable, experienced staff and a proven efficient and cost-effective process is critical to addressing risk exposure while conforming to budgetary mandates.
Third-Parties, where would we be without them. They staff our operations, provide us with know-how and make our organizations more nimble and effective. …. Now what about Fourth-Parties ?!?!
VP Business Development
CastleHill Managed Risk Solutions