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A Vendor Risk Management Policy outlines how an organization identifies, assesses, and controls risks from its business partnerships and supplier relationships. Under Philippine corporate governance rules, it helps companies protect themselves from third-party vulnerabilities while meeting BSP and SEC compliance requirements.

The policy typically covers vendor screening procedures, risk rating systems, ongoing monitoring processes, and incident response plans. It's particularly crucial for Philippine companies handling sensitive data or operating in regulated sectors like banking, where the Bangko Sentral ng Pilipinas requires formal vendor oversight programs to safeguard against operational, cybersecurity, and reputational risks.

Use a Vendor Risk Management Policy when your company starts working with new suppliers, contractors, or service providers in the Philippines. This becomes essential when outsourcing critical business functions, handling sensitive customer data, or engaging vendors who access your IT systems—especially in sectors regulated by the BSP or SEC.

The policy proves particularly valuable during vendor selection phases, contract negotiations, and when expanding supplier relationships. For Philippine businesses facing regulatory audits, having this policy in place demonstrates proper due diligence and compliance with BSP Circular 1074 on third-party risk management and other relevant financial regulations.

• Basic Policy: Focuses on fundamental vendor screening and risk assessment procedures, suitable for small to medium enterprises dealing with routine suppliers
• Financial Services Policy: Includes enhanced due diligence and monitoring requirements aligned with BSP regulations, specifically for banks and financial institutions
• IT/Data Security Policy: Centers on cybersecurity controls and data protection measures for vendors with system access or handling sensitive information
• Enterprise-Wide Policy: Comprehensive framework covering multiple risk categories and complex vendor relationships, typically used by large corporations
• Industry-Specific Policy: Tailored to sector requirements like healthcare, telecommunications, or government contracting with specialized compliance elements

• Risk Management Teams: Lead the development and maintenance of Vendor Risk Management Policies, coordinating assessments and monitoring
• Procurement Officers: Apply policy guidelines during vendor selection and contract negotiations
• Legal Department: Reviews policy compliance with BSP regulations and ensures alignment with Philippine corporate laws
• Department Managers: Implement policy requirements when engaging vendors for their specific units
• Compliance Officers: Monitor adherence to policy guidelines and report violations to senior management
• External Vendors: Must meet policy requirements and undergo regular assessments to maintain business relationships

• Risk Assessment: Document your organization's vendor categories, risk tolerance levels, and critical business functions
• Regulatory Review: Gather relevant BSP circulars and SEC guidelines on third-party risk management
• Industry Standards: Identify sector-specific requirements and common vendor risks in your industry
• Internal Processes: Map out your vendor selection, onboarding, and monitoring procedures
• Stakeholder Input: Collect feedback from procurement, legal, IT, and business units on vendor management needs
• Documentation Rules: List required vendor documents, assessment forms, and reporting templates
• Review Mechanism: Define how often the policy needs updating and who approves changes

• Policy Scope: Clear definition of covered vendor relationships and risk categories
• Risk Assessment Framework: Detailed criteria for evaluating vendor risks aligned with BSP guidelines
• Due Diligence Requirements: Specific procedures for vendor screening and approval
• Data Protection Measures: Controls meeting Philippine Data Privacy Act requirements
• Monitoring Procedures: Regular assessment schedules and performance metrics
• Incident Response Plan: Steps for handling vendor-related issues or breaches
• Compliance Statement: Reference to relevant BSP circulars and SEC regulations
• Review and Update Process: Timeline for policy revision and approval procedures

A Vendor Risk Management Policy differs significantly from a Risk Management Policy in both scope and application. While they're often confused, understanding their distinct purposes helps choose the right tool for your organization's needs.

• Focus and Scope: Vendor Risk Management Policy specifically addresses third-party relationships and supplier risks, while a Risk Management Policy covers all organizational risks, including internal operations, market conditions, and strategic decisions
• Regulatory Alignment: Vendor policies must comply with BSP's specific third-party oversight requirements, whereas general risk policies follow broader corporate governance standards
• Implementation Process: Vendor policies require specific vendor assessment procedures, monitoring protocols, and third-party engagement rules, while risk policies establish organization-wide risk tolerance levels and management frameworks
• Stakeholder Involvement: Vendor policies primarily engage procurement and vendor management teams, while risk policies involve all department heads and executive leadership