CBA EDRppt
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The document discusses regulatory expectations for vendor management in light of the 2008 financial crisis. Regulators now require ongoing due diligence, engagement, monitoring and oversight of third party vendors. This puts strain on financial institutions' resources. Vendor management software can help by centralizing vendor data, tracking performance metrics, and providing audit trails and reporting to facilitate compliance. The presentation focuses on how technology can help address regulatory requirements for ongoing vendor vetting, separation of duties, performance measurement, and enforcement of policies.
CBA EDRppt
- 1. 1 Smart Data. Smarter Workflow. Best Practices in Vendor Management Joseph Benz Regional Manager 2015 CBA Booth #302
- 2. 2 EDR HISTORY • Founded 1990 • Headquarters: Shelton, CT • 260 Employees • Owned by DMG Information • More than 850 Lending Clients • Regional Compliance Summits
- 4. 4 COLLATERAL360 • Appraisal Management and Compliance • Tiered Environmental Reports and monitoring • Flood Certifications • Evaluations • Property Inspections • Tax Monitoring • Property Searches A central place to order, track and manage necessary reports for CRE
- 5. 5 COLLATERAL360 Focus on compliance, workflow, and centralization • Live status of all reports • Bank-wide or loan specific view • Reporting abilities • See all exceptions made to loan policy • Listing of all vendors not currently “up to date” • Highlight all “issues”: delivery deadlines, expectations, revision requests • Staff and remote access
- 6. 6 VENDOR MANAGEMENT Post Mortem • Vendors viewed as contributing factor in crisis • Inadequate oversight from financial institutions Why the focus on vendor management? Impact of Financial Crisis of 2008 Prior to Crisis • Vendor focus limited • Services were outsourced • So was vendor accountability Result: massive fraud and consumer distress
- 7. 7 REGULATORY OVERSIGHT • OCC: Bulletin 2013-29 • OCC Bulletin 2001-47 • OCC Bulletin 2002-16: Foreign-Based Third-Party Service Providers • CFPB: Bulletin 2012-03 Service Providers • Federal Reserve: SR 13-19 Guidance on Managing Outsourcing Risk • FDIC Letter: Guidance For Managing Third-Party Risk – FDIC Compliance Manual, December 2012 – FIL-44-2008: Guidance for Managing Third-Party Risk – FIL-50-2001: Bank Technology Bulletin: Technology Outsourcing • NCUA: Supervisory Letter No.: 07-01 Multiple releases from multiple agencies
- 8. 8 REGULATORY RESPONSE • Renewed regulator focus on third-party oversight OCC, FDIC, FRB, CFPB, NCUA • Institutions must bear responsibility for supplier misdeeds • Enterprise-wide, especially executive involvement • Executive fingerprints on policy • Board of Directors involvement with policy and vendor selection • Clear process for selecting, communicating, monitoring, measuring performance of suppliers
- 9. 9 Compliance as a System Board Oversight Compliance Program Compliance Audit Ownership Define Risk Define Scope Commitment Policy Training Monitoring Responsiveness Independent Periodic Transaction Testing https://www.fdic.gov/news/news/financial/ OCC Bulletin 2013-29 Mandates due diligence in selecting the third party
- 10. 10 NEW REALITY • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – on all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, compliance Combined, they put a strain on an already lean organization! Expectations, Summarized
- 12. 12 TECHNOLOGY AS A SOLUTION • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – on all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, compliance Combined, they put a strain on an already lean organization! Expectations, Summarized
- 13. 13 DUE DILIGENCE Vetting your vendors • Centralized storage and tracking of vendor information: • Contact information • Appraisal licenses • E&O insurance • Coverage areas • Expertise
- 14. 14 TECHNOLOGY AS A SOLUTION • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – on all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, compliance Combined, they put a strain on an already lean organization! Expectations, Summarized
- 15. 15 ENGAGEMENT Project versus Process • Central point for data entry • “Brick wall” separation • Automated engagement letter • Consider the appropriate vendors per policy: • Geographical expertise • Qualifications • History • Live status
- 16. 16 TECHNOLOGY AS A SOLUTION • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – on all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, compliance Combined, they put a strain on an already lean organization! Expectations, Summarized
- 17. 17 VENDOR SCORING Tracking vendor experiences and performance, constantly • Recent Performance • Engagement Performance • Approved Expertise and Coverage Area • Instantly Verify License and E&O • Live Status OCC Bulletin 2013-29 Requires on-going and consistent monitoring
- 18. 18 TECHNOLOGY AS A SOLUTION • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, compliance Combined, they put a strain on an already lean organization! Expectations, Summarized
- 19. 19 AUDIT TRAILS All correspondence, available when you need it
- 20. 20 TECHNOLOGY AS A SOLUTION • Due Diligence – ongoing vetting of vendor’s license, insurance, and qualifications • Engagement – define, separate, engage • Scorecards – vendor performance measurement process • Audit trail – on all vendors • Several other areas of focus - policy enforcement governance, complaint resolution, reporting, onboarding, monitoring Combined, they put a strain on an already lean organization! Expectations, Summarized
- 21. 21 POLICY ENFORCEMENT Enforce loan policy, vendor policy, and track exceptions Reporting • Policy exceptions • Vendor usage • License and E&O issues • Vendor performance • Response time • Quality • Invoice reports • Staff member production
- 23. 23 Thank you! Questions or Comments: 203-265-2463 jbenz@edrnet.com CBA Booth #302