February 14, 2025 Building Trust: The New Era of Vendor Risk Management

How collaborative approaches to compliance are transforming third-party relationships and creating stronger business partnerships.

By Kristen Nunery, myCOI

Nearly half of businesses have experienced business interruptions from third-party issues in the past two years. Despite increased investments in compliance management, rigid processes often slow partnerships down, stifle innovation, and create more frustration than protection. With legal, risk, and compliance functions projected to double their technology spend by 2027, it’s time for organizations to decide whether to cling to “checkbox” compliance or shift toward collaboration and mutual growth.

The cost of checkbox compliance

When compliance is treated as a checklist, it creates unnecessary roadblocks with far-reaching consequences. Across industries, vendors face mounting administrative burdens: repetitive document submissions, multiple rounds of policy revisions, and constant back-and-forth about coverage requirements.

Consider this common manufacturing scenario: A production facility needs a specialized maintenance provider for critical equipment. They identify the perfect vendor, but weeks slip by as both parties navigate a maze of insurance requirements, paper trails, and compliance reviews. By the time approvals arrive, equipment downtime has increased, production schedules have shifted, and the relationship begins with frustration rather than trust.

Sound familiar? If you’ve been in a situation like this, you know the pain of “checkbox risk management.”

These inefficiencies carry significant costs. Teams dedicate valuable hours to administrative tasks, leaving little time for strategic work. Vendor onboarding stretches out, delaying critical projects. Worse, beneficial business relationships are damaged. According to Next Insurance, 90% of business owners lack confidence in understanding their insurance requirements, creating friction in vendor partnerships. Existing vendors, wary of administrative hassle, limit their engagement, reducing the potential for collaborative problem-solving and overall improved risk mitigation.

Leveraging technology to reimagine vendor relationships

Forward-thinking organizations are changing the script. Instead of treating compliance as a barrier, they’re using technology to strengthen partnerships and minimize friction. They’re moving away from checkboxes towards more technology-enabled conversations.

Modern third-party risk management software streamlines documentation, speeding up verification processes that previously bogged down vendor management teams. Automation driven by artificial intelligence takes this further by instantly validating insurance requirements, analyzing complex policy documents, and flagging potential compliance issues before they escalate.

These advancements don’t just save time — they create transparency. Both organizations and vendors can easily track requirements and status updates in real time, making it easier to build trust through a foundation of clear communication and shared understanding.

Perhaps technology’s greatest value is its ability to enable meaningful collaboration. When administrative burdens no longer dominate the conversation, organizations and vendors can focus on shared goals. Project managers can direct their attention to solutions instead of chasing paperwork. Risk managers become strategic allies in growth discussions. Everyone benefits as organizational goals are achieved more effectively.

A culture of collaboration for effective risk management

Success in vendor risk management goes beyond technology — it’s about fostering a culture where relationships thrive. While tools like certificate of insurance (COI) tracking software can streamline processes, it’s the human commitment to collaboration that truly drives success.

Organizations and vendors can reduce friction by taking small but impactful steps. Businesses can simplify onboarding procedures and provide clear, jargon-free guides to help vendors meet compliance requirements. Vendors can proactively maintain organized digital records and engage in smarter risk management efforts.

Here’s how vendors can take a proactive role:

• Convey insurance requirements and coverage details in plain language that project teams can easily understand.
• Create standardized processes for managing certificates across client requirements.
• Maintain digital records of all insurance communications and policy updates.
• Build internal expertise in risk management to engage more effectively with clients.

Organizations also play a crucial role by clearly explaining requirements using business terms, not legal jargon—transforming compliance into manageable, actionable steps. This clarity reduces delays and builds trust, setting the stage for stronger partnerships.

When both sides commit to better communication, processes run smoother, risks are reduced, and collaboration increases, paving the way for mutual success.

Take, for example, a project manager working with a trusted vendor. Instead of delaying progress with back-and-forth emails and extensive paperwork, both parties work from the same transparent, tech-enabled system. The result? Timelines are met, and the partnership strengthens — a win for everyone. Compliance evolves from a burden to an integrated process that enhances innovation and delivers measurable benefits to all stakeholders.

Moving forward together

True success in vendor and third party risk management is more than meeting compliance requirements. It builds partnerships based on trust and shared goals. And third-party management software streamlines that process to foster collaboration, so organizations and vendors can unlock stronger, more meaningful connections.

It’s time to rethink vendor risk management. By shifting the focus from compliance checkboxes to meaningful communication and leveraging tools that enable smarter problem-solving, organizations and vendors can minimize challenges, unlock sustainable growth, and achieve shared success — together.

About the Author
As the founder and CEO of myCOI, Kristen has dedicated over 15 years to transforming compliance management in the insurance technology space. Actively involved in the Indianapolis business community, she champions the importance of automating Certificate of Insurance tracking to help local businesses minimize risk and maximize efficiency. Kristen’s commitment to client success drives her focus on developing solutions that simplify compliance, allowing companies to thrive in their operations.

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