October Compliance Coffee Talk: How to manage vendor pushback on requirements?

Compliance Coffee Talk covers a new topic each month – RSVP for the series.

October:  “What’s the best way to handle vendors that resist or are simply just not able to meet compliance requirements? When is it right to give exceptions?” 

Vendor push back is unavoidable but manageable, so we’ll use October’s session to cover the best practices, plus some specific real-world scenarios to handle. What about established vendors that have leverage on a critical program? What about the SMBs we’re trying to support? Or the vendor run by the mayor’s nephew?

Watch the full replay, or keep scrolling for a summary of some of the key insights and practical tips from the session.

Meet the Experts

• DeMarcus Brookins, Director of Finance & Ops @ Denver Public Schools
• Kristin Marinelli, Founder & CEO @ Kompli

We’ll discuss:

• Understanding common reasons why vendors can’t or don’t want to meet requirements
• When to give exceptions and when to stand firm
• Approaching situations holistically as managed business decisions, not just risk management requirements
• Working upstream with Procurement and Operations
• How your broker can help
• Anticipating pushback whenever you update requirements
• Educating your vendors vs negotiating with your vendors

Key Takeaways

1. Don’t assume vendors are just being difficult – make an effort to understand why they’re pushing back.

Even if you stand completely firm in your requirements, it’s easier to navigate the situation when you understand where they’re coming from.

2. Be proactive when updating requirements.

The earlier you inform vendors, the more time they’ll have to prepare.  And the more time you’ll have to handle questions, work through issues, and clarify expectations before project timelines and key relationships are at risk.

3.  Exceptions should be documented, never arbitrary, and done in the context of a big picture, managed business decision.

The last thing you want is a silent or invisible “yes” that let’s something slip through the cracks or get swept under the rug.  Exceptions will happen for a wide variety of reasons – that’s just the practical reality.  But you’ve always got to document the risks involved, and you can always approach exceptions as part of a managed business decision.

4. Use tools, checklists and frameworks when establishing requirements and evaluating exceptions.

This was a big takeaway last month too.  Here are those checklists that Noelle shared with us in last month’s session.

Here are some checklists and templates from Noelle and Contract Risk Academy:

• Request for Insurance Requirement Template
• Vendor Risk Exposures Matched to Insurance Type
• Vendor Insurance Exception Review Checklist

5. As you get better at verifying requirements and identifying gaps, you’ll naturally have to deal with more vendor pushback.  That’s ok.

It’s easy to get frustrated when requirements aren’t met or when you’ve got non-compliance issues to deal with.  It’s not always the easiest part of the job, but it’s infinitely better than having problems and exposures that you don’t even know about.  At Evident, we see this first hand with every new customer – practically every new customer identifies compliance gaps that they didn’t know they had.  It’s a pain to fix it, but it’s better than ignoring it.

6.Get the key endorsement wording and coverages right in the contract, and put it all in the RFP so vendors know expectations even before they get the job.

This is another area where Evident can help you verify actual coverages, not just collect documents and hope they’re correct.  The three most critical, commonly required endorsements are (1) additional insured, (2) waiver of subrogation, (3) and primary and non-contributory.

7. Don’t hesitate to update contracts and requirement templates regularly – what worked 5 years ago might not work now.

Yes, whenever you update your requirements, you’ll end up getting some resistance from vendors, but the simple reality is that risks are complex and rising, and that requirements need to keep up.

And engage your insurance broker early and often when you’re looking at contracts and requirement templates.  They can give some really great advice, and often might have better insight on changing best practices.