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How to Mitigate Vendor Fraud Risk:
Knowing your vendor is essential to companies that are sensitive to regulatory compliance. This is magnified by companies that rely on third-party vendors, a trend that is becoming more critical as means of controlling costs. However, the added savings of these vendors come with additional exposure to fraud risk. Performing background checks and monitoring activity that is not aligned with your core business values are essential to an organization working with third parties. These five Identity Risk Management tips are the foundation for an organization to implement to better mitigate fraud risk from vendors.
Step 1. Discover - What is the business' legal name? Who are the principals? Who are the officers?
Step 2. Verify - Does the business have the appropriate credentials?
Step 3. Authenticate - Is this a legitimate business?
Step 4. Evaluate - Can I do business with this company?
Step 5. Alert - Is this business exhibiting high-risk behavior? (This is process that involves ongoing notifications.)
Whether you are concerned with regulatory compliance or your organization's reputation, implementing an Identity Risk Management solution is something you should consider the next time your organization is discussing ways to mitigate potential fraud risk. The process of mitigating fraud exposure starts with having this fraud risk discussion.
About the Author:
Michelle Thiel is an advocate for the information industry with an interest in Identity Risk Management solutions, ID Risk Management systems and enhanced due diligence programs.
