Q1 – Fabio, can you please tell the Risk Insights’ readers about yourself, your professional experiences and your current focus?
I joined UBS in 2015 as Head of Global Vendor Management. In this role I am responsible for ensuring UBS vendors are appropriately managed. Prior to UBS, I spend over 7 years as a management consultant with McKinsey&Company, where I specialized in Operations and Technology and I was a leader in the outsourcing and offshoring practice. Further back I was responsible for European and Tier-1 customers in an IT Services firm.
Q2 – At the Vendor & Third Party Risk EMEA Summit you will be discussing the level of quality and service delivery across the life of a contract. Why do you feel this is a key talking point at the Summit?
Many organizations depend on large network of third parties to sustainably operate their business, access talent and optimize delivery. While it is obvious that each firm engaging in outsourcing expects its third parties to deliver the appropriate quality and ensuring service delivery, achieving this goal often requires a shift in mindset and approach. Organizations need to move from managing people to manage service delivery in the context of complex contractual agreements.
Q3 – How can procurement professionals better maintain quality throughout a contract?
In our experience there are three key elements to ensure quality:
Robust contract language that clearly specifies desired output and outcomes
Ongoing performance management via KPIs and dashboards
Periodic review of the contract to ensure it is fit-for-purpose
Moreover to effectively live the three key elements above, it is important to develop appropriate commercial management skills both in the procurement organization and in service delivery management.
Q4 – Can you outline some of the challenges in balancing driving commercial from third party and managing risk?
Outsourcing is perceived as increasing the operational risk of firms. However outsourcing also offers a way of reducing the concentration risk by differentiating over multiple geographies, third parties and in some cases also offering a way of building more resilient operating models by distributing key processes over multiple suppliers and locations.
Driving commercial value from vendors is a catalyst to sustainable third party risk management. Establishing vendor oversight practices that are self-sustaining is one of the most effective ways to create a virtuous cycle. We believe that this can be achieved if vendor oversight not only ensures third party risk is within an institution’s risk appetite, but also creates value keeping vendor’s delivery aligned to the institution’s strategy. The benefits for the contract participants are manifold: clients maximize value for money, and vendors create compelling cases for long-term partnerships.
Q5 – How do you see the role of the vendor risk professional changing over the next 6-12 months?
In regulated industries, like financial services, the overall pressure on vendor risk and performance management will remain high for multiple reasons. On one hand, the regulators are continuously evolving their requirements, on the other hand the banking industry is under cost pressure driven by protracted low interest. This is compounded by a substantial digitalization journey that demands more agility in handling vendors and third parties in general while still keeping the overall risk within the risk appetite.
Hence companies able to attract vendor management professionals that understand the respective industry, and are able to manage both the vendor performance and the risk will have a competitive advantage to ensure efficient risk management that effectively supports business.