Of late, regulators have started focusing attention on the way banks and financial institutions are managing the risk in their supplier management programs. Multiple banks have been getting “findings” from the regulator on not having adequate controls or governance layer around the way their suppliers are on-boarded, managed and de-boarded. While the banks have tightened their credit risk management frameworks over last several years, we believe there are gaps in supplier risk management practices.
We highlight the essential components of the Supplier risk management framework that is based on our experience of working with multiple clients in this space. The paper covers our views on the gaps in existing supplier risk management programs, and discussed potential ways of plugging them. We lay particular emphasis on effective evaluation of supplier performance and the role PMO plays in binding this framework together.
With new compliance requirements, increased scrutiny from regulators and the pressure to maintain ones market position, reputation and brand, developing a comprehensive supplier management function has become critical in recent times. Banks can gain tremendous cost advantages and efficiency gains through increased governance and streamlined operations of supplier management.
We propose an approach that the components laid out in this whitepaper can enable effective supplier risk management practices.