ABA Banking Journal - November/December 2016 - 13


UPFRONT

Banks Make Strides in Third
Party Risk Management
Banks continue to make significant
strides in the area of third party risk
management-though many are
concerned about a lack of knowledge
and not having the appropriate tools
to efficiently assess and manage
vendor risk-according to a study by
Ernst & Young. Ninety percent of the
institutions surveyed said they felt
neutral or negative about how well their
third party risk management tools were
able to help them capture and report
risk, and more than four in ten said
that they consider lack of knowledge
across the organization as a key
challenge going forward.
Despite these concerns, however,
the study pointed out that many
banks have adapted to regulatory
changes over the past few years and
begun to appropriately scale their risk
management programs. Thirty-nine
percent of respondents said that all of
their third parties now fall within the
scope of their vendor risk management
program, up from just 19 percent in
2014. When determining whether to
enter a relationship with a third party,
more than seven in ten organizations
said they conduct pre-contract
regulatory compliance reviews of
potential vendors.

7%
14%

Third party
vendors: who
owns the risk?
When it comes to third party risk
management, banks were split
on which area within the bank
has primary ownership of risk.
Procurement
(first line of defense)

38%
41%
The majority of the banks surveyed
reported using either a centralized
(45 percent) or hybrid (41 percent)
operational model for third party
risk management. In terms of risk
ownership, 41 percent said they
believe that primary ownership of
third-party risk resides with the
procurement organization (or first
line of defense), up from 26 percent
last year.
The survey also noted that
communication surrounding vendor
risk management is improving.

Operational and
enterprise risk (second
line of defense)
Information security
Tech and operations
Source: EY, "Shifting Towards Maturity"
2016 study

Seventy-one percent of banks said
they report third-party breaches
to senior management, and 35
percent report elevating breaches
to the board level. Forty-three
percent said they report critical
third parties to the board, up from
26 percent in the last survey.
Additionally, banks are continuing
to invest time and resources into
third-party risk management-an
overwhelming 95 percent said they
plan to spend the same amount of
time or more on it in the future.

ABA Offers New Online Third-Party
Risk Management Courses
As third-party risk management continues to
become an area of focus for banks of all sizes,
ABA recently released two online training courses,
Vendor Risk Management and Cybersecurity
Management, to help bankers better understand
emerging threats and how to create, implement

and manage sound risk management programs.
Part of ABA's extensive catalogue of online
training, the new courses are being offered in a
self-paced format that can be completed on the
student's own schedule.

Students can also earn credits for the Certified
AML and Fraud Professional and Certified
Regulatory Compliance Manager designations.
Learn more at aba.com/Training/Online/Courses/
Pages/OTBRM.aspx.

aba.com/BankingJournal | ABA BANKING JOURNAL

13


http://www.aba.com/Training/Online/Courses/Pages/OTBRM.aspx http://www.aba.com/Training/Online/Courses/Pages/OTBRM.aspx http://www.aba.com/BankingJournal

Table of Contents for the Digital Edition of ABA Banking Journal - November/December 2016

Chairman’s View
Upfront
Picture This
Banking’s ‘Amazon Moment’
Special Report on Innovation and Technology
Building an ‘Internet of Value’
Do You Do What the Data Tell You?
Innovation in the Bank
Core Exercises
Cover Story Pillar of Her Community
Maintaining a Commitment to Ag Customers
Who You Gonna Call?
Anti-Money Laundering
Power Up Profile
Compliance ‘When Can I Call My Customer?’
Risk Management
ABA Compliance Center Inbox
From the States
Corporate Social Responsibility
Index of Advertisers
ABA Banking Journal - November/December 2016 - bellyband1
ABA Banking Journal - November/December 2016 - bellyband2
ABA Banking Journal - November/December 2016 - cover1
ABA Banking Journal - November/December 2016 - cover2
ABA Banking Journal - November/December 2016 - 3
ABA Banking Journal - November/December 2016 - 4
ABA Banking Journal - November/December 2016 - 5
ABA Banking Journal - November/December 2016 - 6
ABA Banking Journal - November/December 2016 - 7
ABA Banking Journal - November/December 2016 - Chairman’s View
ABA Banking Journal - November/December 2016 - 9
ABA Banking Journal - November/December 2016 - 10
ABA Banking Journal - November/December 2016 - Upfront
ABA Banking Journal - November/December 2016 - 12
ABA Banking Journal - November/December 2016 - 13
ABA Banking Journal - November/December 2016 - 14
ABA Banking Journal - November/December 2016 - 15
ABA Banking Journal - November/December 2016 - Picture This
ABA Banking Journal - November/December 2016 - 17
ABA Banking Journal - November/December 2016 - 18
ABA Banking Journal - November/December 2016 - 19
ABA Banking Journal - November/December 2016 - Special Report on Innovation and Technology
ABA Banking Journal - November/December 2016 - 21
ABA Banking Journal - November/December 2016 - 22
ABA Banking Journal - November/December 2016 - Building an ‘Internet of Value’
ABA Banking Journal - November/December 2016 - 24
ABA Banking Journal - November/December 2016 - 25
ABA Banking Journal - November/December 2016 - Do You Do What the Data Tell You?
ABA Banking Journal - November/December 2016 - 27
ABA Banking Journal - November/December 2016 - insert1
ABA Banking Journal - November/December 2016 - insert2
ABA Banking Journal - November/December 2016 - Innovation in the Bank
ABA Banking Journal - November/December 2016 - 29
ABA Banking Journal - November/December 2016 - 30
ABA Banking Journal - November/December 2016 - Core Exercises
ABA Banking Journal - November/December 2016 - Cover Story Pillar of Her Community
ABA Banking Journal - November/December 2016 - 33
ABA Banking Journal - November/December 2016 - 34
ABA Banking Journal - November/December 2016 - 35
ABA Banking Journal - November/December 2016 - 36
ABA Banking Journal - November/December 2016 - 37
ABA Banking Journal - November/December 2016 - Maintaining a Commitment to Ag Customers
ABA Banking Journal - November/December 2016 - 39
ABA Banking Journal - November/December 2016 - 40
ABA Banking Journal - November/December 2016 - Who You Gonna Call?
ABA Banking Journal - November/December 2016 - 42
ABA Banking Journal - November/December 2016 - 43
ABA Banking Journal - November/December 2016 - Anti-Money Laundering
ABA Banking Journal - November/December 2016 - 45
ABA Banking Journal - November/December 2016 - 46
ABA Banking Journal - November/December 2016 - Power Up Profile
ABA Banking Journal - November/December 2016 - 48
ABA Banking Journal - November/December 2016 - Compliance ‘When Can I Call My Customer?’
ABA Banking Journal - November/December 2016 - 50
ABA Banking Journal - November/December 2016 - Risk Management
ABA Banking Journal - November/December 2016 - ABA Compliance Center Inbox
ABA Banking Journal - November/December 2016 - 53
ABA Banking Journal - November/December 2016 - 54
ABA Banking Journal - November/December 2016 - From the States
ABA Banking Journal - November/December 2016 - 56
ABA Banking Journal - November/December 2016 - Corporate Social Responsibility
ABA Banking Journal - November/December 2016 - Index of Advertisers
ABA Banking Journal - November/December 2016 - cover3
ABA Banking Journal - November/December 2016 - cover4
http://www.nxtbook.com/naylor/BAKS/BAKS0318
http://www.nxtbook.com/naylor/BAKS/BAKS0218
http://www.nxtbook.com/naylor/BAKS/BAKS0118
http://www.nxtbook.com/naylor/BAKS/BAKS0617
http://www.nxtbook.com/naylor/BAKS/BAKS0517
http://www.nxtbook.com/naylor/BAKS/BAKS0417
http://www.nxtbook.com/naylor/BAKS/BAKS0317
http://www.nxtbook.com/naylor/BAKS/BAKS0217
http://www.nxtbook.com/naylor/BAKS/BAKS0117
http://www.nxtbook.com/naylor/BAKS/BAKS0616
http://www.nxtbook.com/naylor/BAKS/BAKS0516
http://www.nxtbook.com/naylor/BAKS/BAKS0416
http://www.nxtbook.com/naylor/BAKS/BAKS0316
http://www.nxtbook.com/naylor/BAKS/BAKS0216
http://www.nxtbook.com/naylor/BAKS/BAKS0116
http://www.nxtbook.com/naylor/BAKS/BAKS0615
http://www.nxtbook.com/naylor/BAKS/BAKS0515
http://www.nxtbook.com/naylor/BAKS/BAKS0415
http://www.nxtbook.com/naylor/BAKS/BAKS0315
http://www.nxtbookMEDIA.com