It helps protect your company. By conducting thorough due diligence and a proper vetting of each vendor, you will detect any areas of concern and/or be able to determine the best partner for your business. Every company will look good by the information they provide, it is by digging deeper with proper analysts where you can find the information you need to make the best decision for your business.
It exposes vulnerabilities of the third-party. And by extension, saves your company from any exposure to risks associated with a vendor that may not be disclosed upfront. For instance, data breaches at third-party vendors are increasing. Your company could be held liable for the cost of your customers’ data even if it is breached at your third-party associate. Knowing that security breaches attributed to vendors has increased from 20% to 28% in recent years (according to PwC’s Global State of Information Security Survey), conducting due diligence on all potential third-party partners is a must.
It is often required by regulators. Due diligence is expected to be performed on all third parties by all of the major regulators. They will require your company to include due diligence in your vendor risk management program. To ensure you meet regulations or requirements of your regulator, it is important to know what other major regulators expect. For instance, OCC Bulletin 2013-29 is considered a must read for regulatory due diligence requirements as we as OCC 2017-7 and the FFIEC guidance on managing outsourced technology.