Third Party Relationship Party
Vendor/third party relationships are an important part of ___FCU’s core purpose. It is necessary and prudent that ___FCU establish and manage these types of relationships in order to strategically provide services and products we could not provide on our own. This policy will provide reasonable assurance that management is appropriately managing contracted critical vendor relationships for a maximum benefit with the least amount of risk.
Senior management must ensure that all risks have been taken into consideration along with the benefits to the CU and its members, and that the risks and returns are acceptable. Careful consideration must be given to the potential risks of these relationships and how best to ...view middle of the document...
Planning and Assessment
___FCU will use the Service Provider spreadsheet to document all risk assessments.
Critical vendors: There must be planning and an initial risk assessment prior to entering into any new critical vendor relationship. Multiple vendors (at least 2) must be considered. Senior management should review all the information in detail before making its final choice. The initial review should take into consideration at a minimum as applicable, the following risks areas: credit, interest rate, liquidity, transaction, compliance, strategic, and reputation, with the main focus being the risk to membership information, cash, and reputation.
Expectations for the relationship must also be defined. Other considerations should include: vendor experience, cost-benefit, impact on the membership, insurance needs, and possible exit strategies. Finally, a financial projection should be created and analyzed to reasonably anticipate all costs and revenues.
Non-Critical Vendors: The risk assessment should focus on the risk to cash, membership information, and reputation for these as well. Expectations should be defined.
Due diligence must be performed on new critical and current critical vendor relationships. The Board defines this review as:
Financial and legal review of contracts
Understanding of the vendor’s business model
Return on investment
Senior management should ensure that program performance vs/ expectations is being reviewed at least annually, and that contractual and service obligations are being met. A report will be made to the Board at least annually on the vendor management process. This report will be documented in the Board minutes.