Centralized vs. Decentralized Programs

A central discussion in third-party risk management is whether to adopt a centralized or decentralized due diligence program. A centralized approach typically involves a single head office making decisions that filter through legal and compliance channels, which can be beneficial for smaller organizations needing strong oversight. Conversely, a decentralized structure allows different business units more autonomy in managing their third-party risks, tailoring processes to their unique contexts while still aligning with overall company guidelines. The choice between these structures largely depends on the organization’s size, complexity, and specific operational needs.