Vendor due diligence, vendor management, and third-party risk are no longer limited to onboarding checklists and annual contract reviews. They now require banks to treat vendors as strategic partners, with clearly defined expectations and accountability throughout the life of the relationship. The focus has shifted to how vendors perform and how they are managed over time, not just how they are selected. 

Regulatory expectations have evolved as well. The conversation has expanded beyond simply asking why a vendor was chosen to understanding critical vendor dependencies, concentration risk, and downstream exposure through subcontractors, including fourth-party risk. 

Banks that are succeeding in this area are not necessarily doing more due diligence. They are doing it better. They align their efforts to the level of risk a vendor presents, connect vendor risk directly to broader banking risk, and document decisions. Examiners are not looking for perfection, they are looking for well-supported decision making. 

Effective vendor risk management should always reflect the size, complexity, and risk profile of the bank and its third-party relationships. There is no one-size-fits-all approach. But there are consistent principles that drive effectiveness.

At its core, vendor management is no longer just a compliance requirement. It is a strategic capability. With the right approach, banks can innovate with confidence, engage proactively with regulators, and build durable third-party relationships grounded in trust and accountability. 

This is where ICBA remains focused, helping community banks manage risk, meet regulatory expectations, and operate in a safe and sound manner through advocacy, education, and innovation.