Discover how financial institutions can effectively manage third-party risk to satisfy both business and regulatory requirements. The scale of regulatory compliance in financial services continues to be a significant challenge. Increasingly, regulators have become more focused on how financial institutions are managing outsourcing and third-party risk. The complexity and volumes of regulation make it necessary to apply technology. Traditionally, the focus of technology has been on certain aspects of third-party risk such as financial viability, geopolitical risks, ongoing regulatory compliance, etc. but the areas under increasing regulatory scrutiny, such as ongoing monitoring of third-party performance, reporting, policy compliance, and more remain under-served by technology.

1. © 2012-17 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
WHAT BUSINESS LEADERS AND
REGULATORS WANT
Managing Third-Party Risk in Financial Services
A Webinar by IACCM and SirionLabs featuring Promontory
27th August 2019

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Before we get started
THE HOUSEKEEPING ITEMS:
• Webinar slides and recording will be emailed
• Enter questions in chat on webinar panel

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
About the organizers
The International Association for Contract & Commercial Management enables organizations and
professionals to achieve world-class standards in their contracting and relationship management process
and skills.
For more information, visit www.iaccm.com
SirionLabs is transforming the contracting engagement between enterprises by bringing contracting parties
closer together across the full lifecycle of the contract – from authoring to performance to closure –
enabling improved savings, business outcomes and effective risk management.
For more information, visit www.sirionlabs.com
Promontory (a global unit of IBM) provides advisory and implementation services grounded in the highest
levels of regulatory and domain expertise. They focus on the intersection of regulation, risk management,
compliance, and technology, delivering practical and innovative solutions to address business strategy, risk
management, and compliance challenges.
For more information, visit www.promontory.com

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Why it is critical for
organizations to get
third-party risk
management right
How regulators expect
financial institutions to
manage third-party
supplier engagements
The role of technology
in effective third-party
risk management
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What will be covered today

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary.
AJAY AGRAWAL
Co-founder and CEO
SirionLabs
TIM CUMMINS
President
IACCM
Meet the speakers
ROBIN SHAHANI
Managing Director
Promontory

6. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Third party risk management: current state
Economic &
Operating
environment
62% need to reduce
costs, lack required
talent
Investment
A piecemeal approach
means only 21% cover
all or most risks
Leadership
Responsibility with
the Board, but
stakeholder
coordination
problematic
Operating model
‘Federated’ (69%)
replacing centralized;
centers of excellence
>65%
Technology
A three-tiered
approach with
‘smartly coordinated
investments’
Source: Deloitte EERM Survey 2018

7. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
From 4% to 10% of Revenue
Increase in compliance spend by by 2022
Duff & Phelps
$ 321 billion
Fines paid by banks globally since the financial
crisis as regulators stepped up scrutiny
Boston Consulting Group (BCG)
$1.1 billion
Penalty for a global bank for breach of money-
laundering laws and economic sanctions
What are we missing here?
$100 billion
Global spending among banks on compliance
The Trade

8. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Financial institutions manage a high complexity supplier eco-system
18%
20%
20%
24%
25%
29%
44%
46%
52%
58%
63%
65%
72%
74%
75%
79%
85%
95%
98%
Consumer Products
Industrial Products
Construction and Engineering
Primary Production
Chemicals
Pharmaceuticals
Oil & Gas
Utilities
High-tech Products
All Industries
Transportation and Logistics
Government
Media, Entertainment, Leisure
Retail (excluding COGS)
Healthcare
Telecommunications
Professional Services
Financial Services
Insurance
Source: Forrester and US Bureau of Economic Analysis

9. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
What’s at stake for financial institutions?
$530 million
Settlement by three leading
financial services companies
for deceptive selling and
predatory behavior by third-
party suppliers
• Stringent penalties
• Reputation, financial viability, customers
• Innovation and competition

10. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
How regulators view third-party relationships
“Third-party relationships may increase a bank’s
exposure to operational risk because the bank may not
have direct control of the activity performed by the third
party. Operational risk can increase significantly
when third–party relationships result in concentrations.”
OCC Bulletin 2013-29, Third-Party Relationships: Risk
Management Guidance
Organizations can
outsource the
work, but they
cannot outsource
the responsibility

11. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Managing
risk and
opportunity
through
uncertainty
analysis
Source: IACCM Research Forum, July 2019

12. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
The role of technology
By 2020 RegTech is
expected to make up 34%
of all regulatory spending
KPMG
• Combining GRC tools with specialized point
solutions to enhance risk management
effectiveness
• Going beyond the front-end due diligence for
critical suppliers
• Leveraging technology to automate ongoing
performance monitoring
• Minimizing reliance on self-reporting and self-
certification by suppliers

13. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Extending the scope of risk management through technology
• For strategic suppliers, a deeper risk management approach is needed to address specific types of risks not
adequately addressed by GRC:
• Contractual risk
• Performance risk
• Financial risk
• A granular, obligation level contract and supplier governance is needed
• Ongoing monitoring of supplier performance against contractual obligations is critical:
• Service level performance
• Non-service level obligations (Reporting on internal controls, incident management protocols, network
and physical security, etc.)
• Business continuity and disaster recovery planning and testing
• Results from supplier audits
• Regulatory compliance risk
• Policy compliance risk
• Comprehensive change management is needed as strategic contracts undergo frequent changes

14. © 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
Financial Risk Sirion - Supplier & Contract Governance Technology
Performance
Management
Contract
Management
Financial
Management
Relationship
Management
In-Life Management
Termination &
Closure
Supplier Risk & Compliance
Contractual and
Performance Risk
Lifecycle of a Third Party Engagement
How Sirion and GRC interoperate
GRC Tech
Supplier Diligence/
Onboarding
Third Party Risk
Financial
Risk
Entity Risk
Continuity
Risk
Reputation
Risk
UNIFIED VIEW OF THIRD PARTY RISK
Regulatory
risks/periodic
audits

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
What’s next?
• Please complete a brief survey at the end of this webinar to give us your
feedback
• Look out for a follow-up email with a copy of these slides and a recording of the
webinar
• Join us for more such events

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© 2012-19 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
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