Building a Fraud-Resilient Vendor Risk Management Program: From Culture to Conversation
Your vendor risk management program is only as strong as your company culture.
by Ashley Poynter
Content Manager
PaymentWorksBuilding a Fraud-Resilient Vendor Risk Management Program: From Culture to Conversation
Vendor fraud is no longer a niche problem—it’s a boardroom issue. In an era of AI-powered impersonation scams, email-based vendor fraud, and business email compromise (BEC), every organization needs a comprehensive vendor risk management program that extends beyond policy binders and compliance training.
But here’s the hard truth: your vendor risk management program is only as strong as your company culture. It’s not enough to have documented procedures if the people implementing them are pressured to skip steps, make exceptions, or “just get it done.”
This guide will show you how to align your culture, leadership, and vendor controls to build a fraud-resilient vendor risk management program—one that empowers your team, enables difficult conversations, and keeps fraudsters on the outside looking in.
Table of Contents
Make Culture Your First Line of Defense
Build the Backbone: Policies That Hold Up Under Pressure
Document the Good, the Bad, and the Risky
Embed Strategy Into Your Vendor Risk Management Program
Regular Reviews Keep Risk Real
Know When to Raise the Alarm: 5 Red Flags That Warrant a Leadership Conversation
Understand the Fraud Behind the Exceptions
Give Your Vendor Team the Power of “No”
Document, Communicate, Automate: The Fix That Works
A Modern Vendor Risk Management Program Starts with Culture
Get Ready for Vendor Management Day 2025
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Make Culture Your First Line of Defense
A modern vendor risk management program doesn’t just start with policies—it starts with people. Fraud rarely slips in because someone’s careless; it slips in because your systems are too polite. When verbal approvals, workarounds, and “just this once” exceptions become the norm, you’re rolling out the red carpet for bad actors. Our own Angela Sarno emphasizes that, if a process hasn’t been followed several times within a few weeks, you don’t have a process—you have a culture problem:
That’s why a no-exceptions culture isn’t just a nice-to-have—it’s your first real line of defense.
When a “CEO” asks your AP team to push through a last-minute vendor payment and your team’s default response is “we need to follow the process,” you’re winning.
Key strategies to support this:
- Enforce a blanket rule: no vendor banking changes approved via email—no matter who it’s from.
- Require all unusual requests to be rerouted through secure secondary verification methods (phone, in-person, or portal).
- Educate leadership that convenience-driven exceptions are often what fraudsters count on.
A company-wide cultural reset toward consistency and compliance is essential to the success of any vendor risk management program.
Build the Backbone: Policies That Hold Up Under Pressure
If culture is the heart of your vendor risk management program, documentation is the spine. It holds everything upright when urgency, pressure, or ambiguity try to bend the rules. A robust onboarding and change management policy does more than tell people what to do—it protects your team from last-minute favors, proves your compliance under scrutiny, and might even score you better terms on your cyber insurance.
Here’s what that backbone should include:
- Step-by-step vendor onboarding procedures (no guesswork allowed)
- Clearly defined responsibilities by team or role
- Criteria for deactivating vendors (because not every relationship is forever)
- Internal controls and audit requirements that actually get used
When leadership sees a policy that’s been co-signed by finance, procurement, AP, and risk, it sends a powerful message: this isn’t just a process—it’s a priority. Strong documentation replaces “how we’ve always done it” with “how we all agree to do it.” And that’s the kind of clarity that not only stops fraud, but earns the respect of auditors, insurers, and internal stakeholders alike.
Document the Good, the Bad, and the Risky
Even the strongest vendor risk management program will face the occasional “just this once” request. The trick isn’t pretending exceptions won’t happen—it’s making sure they’re documented when they do.
Enter the Exceptions Log: your go-to tool for tracking every request to step outside the lines, approved or not. This isn’t about playing gotcha—it’s about creating visibility. When you start connecting the dots, you’ll spot repeat requestors, chronic bottlenecks, and policy weak spots that need attention. Think of it as your risk radar: the more you log, the clearer the picture becomes.
Here are some ways to keep everyone on track:Â
- Log who made the request, what was requested, the justification, and whether it was approved
- Require manager sign-off for any exception, even if denied
- Review exceptions quarterly for trends and training opportunities
Documentation transforms anecdotal concerns into patterns—and patterns build the case for stronger process controls. This visibility is a cornerstone of a transparent vendor risk management program and allows organizations to be proactive, not reactive.
Embed Strategy Into Your Vendor Risk Management Program
Vendor risk management doesn’t have to feel like red tape. Done right, it’s not a bottleneck — it’s a smart filter. It’s about giving your team the tools to see risk management as risk intelligence.
Here’s what a strategic approach unlocks:
- Less fraud, more peace of mind
- Cleaner vendor files with less effort
- Greater adoption of secure payment methods
- Fewer do-overs, manual fixes, and headaches
Instead of treating vendor onboarding as just another compliance box to check, reframe it as a frontline defense against risk. When the process is seen as a strategic asset — not a back-office burden — teams are more likely to buy in.
Connect onboarding metrics to fraud prevention KPIs, and show how automation can keep things tight and efficient. Because in a growing business, strategic vendor management isn’t just a nice-to-have — it’s your built-in armor.
Regular Reviews Keep Risk Real
Your vendor risk management program isn’t “set it and forget it.” Policies should evolve with your business, your vendor base, and the growing sophistication of fraud tactics. That’s why regular policy reviews are a non-negotiable part of keeping your program sharp.
The fix? Treat your vendor management policy like a living document. Gather feedback from procurement, AP, finance, risk, and vendor teams. Schedule reviews at least twice a year to ensure your procedures still match the current threat landscape—and your own operations.
Pro tip: Appoint a policy owner and establish a recurring cadence (every 6 months works great). Regular reviews show insurers, auditors, and internal teams that your vendor risk management program doesn’t just exist—it’s active, adaptive, and accountable.
Know When to Raise the Alarm: 5 Red Flags That Warrant a Leadership Conversation
Even the strongest vendor risk program can crumble if everyone’s not rowing in the same direction. If any of these red flags sound familiar, it might be time for a candid conversation with leadership:
- “Just approve it real quick.” — Rushed approvals often skip the critical stuff — like verifying tax IDs or bank details. That’s not speed, that’s risk.
- Skipping steps “just this once.” — Convenience is a fraudster’s favorite loophole. When validations become optional, your controls lose their teeth.
- Onboarding vendors without vetting — Whether it’s a “trusted” vendor or a last-minute fire drill, skipping due diligence invites impersonators right through the front door.
- Too many exceptions — If workarounds are becoming the norm, your process has quietly gone off the rails — and accountability disappears with it.
- Pushback on documentation — If someone’s reluctant to put things in writing, that’s a signal. If it can’t be tracked, it can’t be trusted.
Spotting these behaviors is just the beginning. Escalating them — and reinforcing why the process exists — is how you keep your vendor risk program (and your bottom line) protected.
Understand the Fraud Behind the Exceptions
Exceptions are how most fraud gets in the door.
Just ask Hannah Kanouff, Vendor Management Coordinator for the Office of Central Procurement at Penn State University, who knows that robust fraud and security teams can go a long way…but things can still sneak through:
Two of the most common types of vendor fraud—impersonation and BEC—thrive in environments where policy enforcement is weak and documentation is optional.
Vendor Impersonation Fraud — A fake vendor (or fraudster hijacking a real vendor’s identity) submits updated payment information. If your team’s culture allows email-based approvals or overrides due to hierarchy, you’re at serious risk.
Business Email Compromise (BEC) — A fraudster poses as the CFO, sends a “we need this ASAP” email, and your process gets skipped. Without second-factor verification, this tactic can lead to massive losses.
A robust vendor risk management program defends against these by enforcing identity checks, leveraging secure communications, and requiring multi-person approvals on sensitive updates. Process rigor isn’t a roadblock—it’s the lock on the door.
Give Your Vendor Team the Power of “No”
One of the best fraud controls you can implement? Empowering your vendor team to say no—and mean it.
Fraud often slips in because someone was afraid to challenge an urgent request from “higher up.” But when your vendor team knows they’re backed by leadership, documented policy, and a clear approval structure, they can hold the line—without hesitation.
Better yet, make it official. Let leadership publicly empower AP, procurement, or vendor managers to question irregular requests, flag inconsistencies, and halt exceptions until proper validation happens.
Bonus move: Celebrate those moments. Reward people who uphold the process, especially when it means pushing back on a high-ranking request. That’s how you reinforce the right culture—by making heroes out of the ones who protect the system, not just the ones who move fast.
Document, Communicate, Automate: The Fix That Works
There’s no single magic bullet to fix vendor risk. That said, you can creatively layer people and processes to make your vendor risk management program more effective—and more scalable.
Document
- Write and circulate your vendor onboarding and change management policy. Â
- Use an Exceptions Log to gather data and build the case for compliance. Â
- Maintain audit trails on all vendor actions.
Communicate
- Train your staff on red flags, escalation protocols, and the cost of fraud. Â
- Empower vendor teams to say “no,” even to senior leadership. Â
- Engage leadership regularly with reports, metrics, and emerging risks.
Automate Â
Leverage an automated platform to do the heavy lifting:Â Â
- Vendor-submitted information Â
- TIN and bank account validation Â
- Role-based approvals Â
- Indemnification against ACH fraud
Automating identity verification and policy enforcement reduces manual errors and makes compliance the default—not the exception.
A Modern Vendor Risk Management Program Starts with Culture
You can’t patch your way to security. A vendor risk management program built on manual processes and good intentions will eventually break.
To build something that lasts—and something that scales—you need:
- A culture that values compliance over convenience Â
- A process that can stand up to urgency and executive pressure Â
- A toolset that enforces policies and protects against fraud
Start by documenting what’s really happening in your vendor management workflows. Use your Exceptions Log to start the conversation. And when it’s time to upgrade from policy PDFs to platform-powered risk controls, PaymentWorks is ready to help.
The most effective vendor risk management programs don’t just protect—they empower. And that starts with culture, leadership, and a refusal to make exceptions.
Get Ready For Vendor Management Appreciation 2025
The Vendor Management Appreciation Day (#VMAD) celebration continues in 2025! And you should join us.Â
Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.
Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2025 celebration, and we want you to be a part of it!
VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.
Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.
In the meantime, learn more here, and grab some free vendor management goodies.
Want Help Aligning Teams On a Solid Vendor Risk Management Program?
Explore our blogs below. They’re filled with action items you can implement right away.
Why a Weak Vendor Identification Process at Onboarding Makes You Vulnerable to Fraud
Vendor Verification: How NOT to Do it and What to Do Instead
The New Face of Vendor Fraud Cases
Interested in Regular Tips On a Solid Vendor Risk Management Program?
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