“You can’t outsource accountability” – It’s a mantra insurers are hearing loud and clear from regulators in 2025, as new rules demand greater resilience, tighter third-party oversight, and sharper audit trails.
Vendor risk isn’t a procurement issue, it’s a boardroom and regulatory priority. And it’s fast becoming a reputational flashpoint.
Just ask the Lloyd’s syndicates now weighing liability cover for AI-powered chatbots. It’s the clearest sign yet that insurers are waking up to the operational and regulatory fallout of third-party tech failures, whether it’s a rogue algorithm, a weak vendor control, or an invisible risk buried deep in the supply chain.
The Regulatory Crunch Point
The vendor oversight playbook has been rewritten. Firms can no longer rely on annual spreadsheets or boilerplate questionnaires. Under SYSC 15A and PS21/3, the UK’s Financial Conduct Authority mandates that firms identify “important business services,” map critical third-party dependencies, and conduct resilience testing with documented audit evidence.
Across Europe, the EU’s Digital Operational Resilience Act (DORA) raises the bar by introducing unified ICT risk standards, mandatory incident reporting, and a spotlight on cloud and software vendors. Articles 28-44 are particularly clear: understanding and managing third-party risk is operational resilience DNA.
Add in EIOPA’s ICT guidelines, the forthcoming ESA “Critical Third-Party Providers” list, and pressure from boards and brokers, and the message is clear: traditional vendor audits could be a risk in themselves if they don’t get to the detail that is required to comply.
Due Diligence – The Foundation of Vendor Assurance
Before any audit programme can deliver meaningful insight, insurers need a robust, consistent, and centralised due diligence process. Without it, audits risk becoming tick-box exercises that miss critical vendor vulnerabilities.
Many insurers still face fragmented procurement processes; different business functions applying different vendor vetting standards, inconsistent data capture, and overdue or incomplete reviews. In one case, Pro Global was engaged to help a leading international insurance provider with a backlog of approximately 800 clients needing full due diligence, as well as the migration of up to 2,000 client records into a new database.
By engaging directly with all business functions, gathering requirements, and applying our experience in vendor governance, we created a single, end-to-end due diligence process supported by clear procedural documents and tailored vendor assessment forms. We then embedded this process into a central platform, streamlining reviews and ensuring every vendor, new or existing, could be assessed, tracked, and updated in one place.
The result:
- Consistency: unified approach across the organisation
- Efficiency: reviews cut to 30 minutes per client, with records updated in under 10 minutes
- Transparency: everything stored in a single, accessible location
- Readiness: due diligence records instantly available for audit or regulatory review
With this foundation in place, vendor audits can move from retrospective checking to proactive assurance.
From Due Diligence to Audit – Closing the Loop
Traditional vendor reviews rarely provide the depth or agility needed to meet today’s compliance expectations. Our Audit-Tech service is designed to close that gap, delivering scalable, tech-enabled audits that provide real-time assurance and complete transparency for insurers and MGAs navigating complex vendor ecosystems.
Key features include:
- Criticality Mapping – Rapidly identify which vendors underpin your most important business services. Focus audit efforts where they matter most.
- Impact Tolerance Frameworks – Define acceptable levels of disruption, clarify roles and responsibilities, and highlight weak links across the chain.
- AI-Enhanced Audit Workflows – Streamline data collection, automate issue detection, and drive faster remediation, with real-time dashboards that keep internal teams and regulators in the loop.
- A Single Source of Audit Truth – Store all findings, evidence, and remediation activity in a secure, cloud-based portal, enabling full transparency and readiness for scrutiny at any time.
The days of treating vendor audits as a box-ticking exercise are over. With regulators making clear that firms remain accountable for the risks their vendors introduce, audit oversight must become more than reactive compliance – it needs to be proactive, continuous, and embedded into governance at every level.
Vendor assurance isn’t just about passing an inspection. It’s about owning the risk.
Meet our expert
Name: Pervin Sivanathan
Job title: Group Head of Audit & Advisory
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