Risk Insider: Quin Rodriguez

How Vendor Risk Management Affects Your Brand

By: | March 23, 2018 • 3 min read
Quin is responsible for leading Riskonnect's vision to drive growth and engagement in the Integrated Risk Management market. Quin has 18+ years of Executive Sales Management and Leadership experience with 10 of those in the GRC Industry. His primary focus the past ten years has been in BFSI, Retail, Tech & Communications and Manufacturing.

There are a lot of famous quotes about people being judged by the company they keep. These quotes ring particularly true for businesses who, until recently, could largely partner with vendors without any scrutiny.

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But those days are over. Thanks to the demand for transparency from today’s consumers, people now consider a company’s social consciousness and action when determining brand perception. The proverbial company that businesses keep, including their vendors, is now a large part of their overall brand image.

Companies no longer have the luxury of the blame game when it comes to their vendors/suppliers. Instead, today’s economy squarely places the blame on the parent brand.

For example, if a consumer finds out your electronics company uses parts shipped from a warehouse that employs underage workers, they will take their business elsewhere, but not before broadcasting this information over social media. Likewise, if you outsource your cyber security and experience a security breach, your brand is front and center, not your outsourced vendor.

How to Protect Your Brand

As these vendor risks abound, what steps can you take to protect your brand? Three common practices I recommend are regularly conducting vendor evaluations to understand your exposure, developing proactive vendor risk practices to address risks as they arise and looking beyond your vendors to understand their suppliers.

When selecting your vendors, it is important to be vigilant in the vetting process, ensuring potential vendors align with your company’s mission, values and standards. Once selected, actively monitor your vendor practices to ensure they remain compliant and accountable.

Staying ahead of risks means understanding how worldly changes affects your vendor practices, including political leadership and government regulation changes.

Companies no longer have the luxury of the blame game when it comes to their vendors/suppliers. Instead, today’s economy squarely places the blame on the parent brand.

Being proactive is the key to understanding and mitigating vendor risks before they snowball into larger issues. Your risk management team should take note of common vendor issues and develop strategies to proactively combat these issues.

One recommendation is to follow competitor and industry news to identify vendor risks and develop strategies to address these risks. While these risks may not be currently affecting you, having a plan established and learning from your competition will help ensure you are ready to address any situations that arise.

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While it is easy to just look at your direct vendors/suppliers, having a true vision of your vendor risk requires you to dig deeper. Actively examine and monitor your third, fourth, fifth and even sixth-party vendors to understand their practices.

While this may initially seem excessive, when these vendors advance into a crisis, customers will extend the blame to all involved parties. The major brand will catch most, if not all, of the heat regardless of how much insight they had into the issue.

When it comes to vendor risk management, the biggest brand name is bound to face the most scrutiny. While companies may choose to finger-point to their vendors, at the end of the day, they, not their vendors, remain the face of the issue.

It’s all about the company you keep. Thus, brands must bring vendor risk management to the forefront of their initiatives to ensure they are actively monitoring and managing their key partners.

More from Risk & Insurance

More from Risk & Insurance

2018 Most Dangerous Emerging Risks

Emerging Multipliers

It’s not that these risks are new; it’s that they’re coming at you at a volume and rate you never imagined before.
By: | April 9, 2018 • 3 min read

Underwriters have plenty to worry about, but there is one word that perhaps rattles them more than any other word. That word is aggregation.

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Aggregation, in the transferred or covered risk usage, represents the multiplying potential of a risk. For examples, we can look back to the asbestos claims that did so much damage to Lloyds’ of London names and syndicates in the mid-1990s.

More recently, underwriters expressed fears about the aggregation of risk from lawsuits by football players at various levels of the sport. Players, from Pee Wee on up to the NFL, claim to have suffered irreversible brain damage from hits to the head.

That risk scenario has yet to fully play out — it will be decades in doing so — but it is already producing claims in the billions.

This year’s edition of our national-award winning coverage of the Most Dangerous Emerging Risks focuses on risks that have always existed. The emergent — and more dangerous — piece to the puzzle is that these risks are now super-charged with risk multipliers.

Take reputational risk, for example. Businesses and individuals that were sharply managed have always protected their reputations fiercely. In days past, a lapse in ethics or morals could be extremely damaging to one’s reputation, but it might take days, weeks, even years of work by newspaper reporters, idle gossips or political enemies to dig it out and make it public.

Brand new technologies, brand new commercial covers. It all works well; until it doesn’t.

These days, the speed at which Internet connectedness and social media can spread information makes reputational risk an existential threat. Information that can stop a glittering career dead in its tracks can be shared by millions with a casual, thoughtless tap or swipe on their smartphones.

Aggregation of uninsured risk is another area of focus of our Most Dangerous Emerging Risks (MDER) coverage.

The beauty of the insurance model is that the business expands to cover personal and commercial risks as the world expands. The more cars on the planet, the more car insurance to sell.

The more people, the more life insurance. Brand new technologies, brand new commercial covers. It all works well; until it doesn’t.

As Risk & Insurance® associate editor Michelle Kerr and her sources point out, growing populations and rising property values, combined with an increase in high-severity catastrophes, threaten to push the insurance coverage gap to critical levels.

This aggregation of uninsured value got a recent proof in CAT-filled 2017. The global tally for natural disaster losses in 2017 was $330 billion; 60 percent of it was uninsured.

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This uninsured gap threatens to place unsustainable pressure on public resources and hamstring society’s ability to respond to natural disasters, which show no sign of slowing down or tempering.

A related threat, the combination of a failing infrastructure and increasing storm severity, marks our third MDER. This MDER looks at the largely uninsurable risk of business interruption that results not from damage to your property or your suppliers’ property, but to publicly maintained infrastructure that provides ingress and egress to your property. It’s a danger coming into shape more and more frequently.

As always, our goal in writing about these threats is not to engage in fear mongering. It’s to initiate and expand a dialogue that can hopefully result in better planning and mitigation, saving the lives and limbs of businesses here and around the world.

2018 Most Dangerous Emerging Risks

Critical Coverage Gap

Growing populations and rising property values, combined with an increase in high-severity catastrophes, are pushing the insurance protection gap to a critical level.

Climate Change as a Business Interruption Multiplier

Crumbling roads and bridges isolate companies and trigger business interruption losses.

 

Reputation’s Existential Threat

Social media — the very tool used to connect people in an instant — can threaten a business’s reputation just as quickly.

 

AI as a Risk Multiplier

AI has potential, but it comes with risks. Mitigating these risks helps insurers and insureds alike, enabling advances in almost every field.

 

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]