Client Alert: Third-Party Vendor Diligence – A Critical Element of the Risk Management Process for Community Banks
Tuesday, October 15, 2013
Community banks often outsource key operational functions in order to take advantage of technological developments and expertise that they do not have or cannot afford to maintain in house. As federal agency guidance makes clear, banking regulators will evaluate activities conducted through third-party relationships as though the activities were performed by the institution itself. Thus it is imperative that a financial institution's board of directors and senior management identify and control the risks arising from outsourcing arrangements.
This Client Alert from the Wyrick Robbins Banking & Financial Institutions Practice Group provides an overview of an effective risk management strategy with a particular focus on the due diligence process in selecting a third-party vendor. The Alert includes, as an 11-page attachment, guidance for financial institutions on managing third-party risk published by the Federal Deposit Insurance Corporation (FDIC).