15,500+ 5, , ,000. Bloomberg Corporate Profile. Real-time financial information. employees. 192 locations around the world

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1 Bloomberg Corporate Profile Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company s strength delivering data, news and analytics through innovative technology, quickly, and accurately is the core of the Bloomberg Professional service. Real-time financial information 325,000 15,500+ employees 5,000 new stories daily 150 bureaus in 73 countries Subscribers Globally 192 locations around the world 980,000 Global circulation in 150 countries 1

2 Bloombergs Source to Pay Transformation This Project was about Elevating Service Capabilities through: Reviewing current work processes to understand the current state Identifying opportunities to close AP & Procurement service gaps Understanding if there are any controls or compliance risks Defining and prioritizing efficiency and effectiveness opportunities Optimizing technology Performing spend analysis and category profile of top commodities Determine ideal organization design Develop high level business case Building transformation roadmap Which is enabling us to Improve the Stakeholder experience Convenient self-service Transparency and reporting Flexible processes aligned to business needs; ease of use Deliver Additional Value Eliminate non-value added activities Become more proactive and strategic Drive more value from supply base Support Future Growth Create more flexible and scalable processes Prevent excessive workforce and cost growth Maintain competitive service levels in the future Resulting in Speed of Execution Ease of Use Better transparency Align to stakeholder and Bloomberg business objectives Provide operational agility to internal stakeholders A Sustainable Cost to Serve Cost competitive; center of excellence Focus on operational effectiveness Automation of low value add service activities Service levels aligned to business unit needs Shifting from tactical reactive organization to proactive strategic partner 2

3 The S2P Transformation involved many projects l Category Management / Stakeholder Management Development of Category Plans Savings Validation Meetings Increase Management of Addressable Spend Creating an esourcing Program Supplier Relationship Management (SRM) program l Purchasing Operations PO Processing / Buying Channel Optimization P-Card Program Catalogs SAP Project, erfx ARIBA l Spot Buying l Catalogs l einvoicing l Global Standards Project l Procurement Policy and Procedures l Spend Reporting/Analytics l Auto Material Creation l Technology Enhancements/Roadmap l Reducing small $ invoices l Payment Optimization l Sustainability l Organization Redesign l Travel and Expense Concur Travel Policy Corporate Card Program Receipts Management Expense Policy l Contract / Records Retention Policy What about Third Party/Vendor Risk?? 3

4 Developing a Vendor Risk Management Program In 2014, Procurement began efforts to establish a Vendor Risk Management (VRM) program for the selection, management and oversight of third party vendors to identify, measure and mitigate risks associated with vendor provided products and services. The framework will initially focus on business critical and high risk supplier engagements and consist of the following key activities: Assess business criticality and risk associated with vendor engagements Conduct vendor due diligence for business critical and/or high risk engagements Ensure contract compliance Conduct ongoing vendor oversight and monitoring Renew or terminate a vendor relationship VENDOR ENGAGEMENT LIFECYCLE Business Requirements, Supplier Sourcing and Selection Engagement Level Risk / Criticality Assessment Vendor Level Risk Assessment (High risk engagements) Contract Management & Vendor Transition Vendor Performance Monitoring Termination or Renewal Due Diligence Business case Execute NDA RFx processes Supplier due diligence and selection OFAC compliance Business impact, criticality & risk assessment: product / service impact to BLP Financial Viability Assessment Litigation Background Check Security review (Infosec & DR/ BCP) Use appropriate templates Consult Legal Vendor onboarding procedures Manage and report on vendor engagement compliance and risk SLA management Contract expiry management Vendor extension/ offboarding procedures 4

5 In our approach, we have to ensure we don t boil the ocean we need to focus on business critical/high risk vendor engagements first Focus on where we think the risks are and develop right sized approach and processes to mitigate Low Impact High High Risk ranked vendor product/services categories to quickly identify business critical/high risk engagements e.g. Office Supplies=low risk, Business Application Software=high risk Business Critical X Segmented/risk assessed current active vendors using Accounts Payable data feed Using the category risk classifications we were able to quickly filter down vendors for the business to risk assess - resulting in ~500 suppliers with business critical/high risk engagements Low Risk High 5

6 While we need to support the business, we cannot impede the business To ensure we don t negatively impact quality time-to-market for any Bloomberg products and services, we have applied a rule-based approach when establishing our risk models to allow for efficient processing and quick turnaround times while still maintaining an effective risk assessment process Steps 1 & 2 have been developed as a terminal function VRMA<GO> to allow enduser to quickly and easily enter questionnaire and have engagement risk ranked New Vendor Engagement (or renewal with material change to scope/type of work, goods, or services) 100% SUB-CATEGORY If engagement aligns to low or moderate risk category, end-user can proceed to contract Estimate ~65% vendor engagements eliminated from further VRM processing ENGAGEMENT IMPACT ASSESSMENT End-user needs to complete a series of 8-24 simple yes/no questions to assess business criticality and engagement risk (e.g. access to client data) Estimate ~85% of remaining vendor engagements further eliminated from additional VRM processing ~35% ~15% VENDOR RISK ASSESSMENT Conduct vendor risk assessments for high risk engagements only The vendor risk assessment is time-boxed to once year only The vendor level risk assessment includes a financial viability assessment and a litigation background check Business head has final approval authority for vendor engagement EXAMPLES 1. Facilities establishes a new contract with Staples for office supplies Office Supplies is a low risk category, the end-user can proceed to contract 2. R&D engages new vendor for professional services IT Contingent Labor is a high risk category, the end-user need to complete a questionnaire End-user completes questionnaire & engagement assessed moderate risk - end user can proceed to contract 3. HR engages an existing vendor for new employee benefits program Benefits Administration is a risk category, the end-user needs to complete a questionnaire End-user completes the questionnaire and engagement assessed high risk Vendor not risk assessed in last 12 months, VRM team conducts FVA and litigation background check 6

7 Vendor Risk Management Assessment (VRMA) Categories Identified six risk categories and criteria allowing us to define and interpret vendor risk in a uniform and consistent manner across the enterprise. Vendor Risk Key Considerations 1. Information / Physical Security Confidential / sensitive client or employee data Level of access to Bloomberg facilities Hosting data/applications outside Bloomberg environment/firewall Access to Bloomberg IP 2. Business Continuity Outage impact to business Revenue and/or cost impact to Bloomberg 3. Operational / Financial Historical financial performance and credit rating of the vendor Revenue concentration 4. Regulatory / Legal Regulatory compliance requirements & history Bribery or corruption Personal health information (PHI) risk Co-employment risk Tax and trade compliance 5. Geographic Govt./Political stability Natural disaster risk Country economic/ financial instability Crime/corruption rate IP protection/legislation 6. Reputational Influenced by all other risk areas 7

8 Where does Bloomberg s VRMA fit within the Vendor Engagement Life Cycle? Contract Management NDA MA SOW Vendor Engagement Life Cycle Sourcing & Selection Due Diligence On-board Manage & Monitor Exit/ Renew Bloomberg s VRMA Engagement Business Impact & Risk Assessment Physical Access Critical Services/Technology Personal/Confidential Information Systems Access Interaction with Government Officials Activities subject to specific laws and regulations Nature of customer interaction Subcontractor Usage Geographic Locations Cloud Services Business Criticality & Risk Ranking Tier 1: HIGH Tier 2: MODERATE Tier 3: LOW 8

9 End User Performs Survey: Vendor engagement questions Mandatory questions for either net new engagements or material changes to existing engagements in high risk sub-categories For this engagement, will this vendor be subject to regulatory or compliance requirements based on the product or service provided in this engagement? For this engagement, will the vendor engage in activities that will have direct contact with Bloomberg s customers, such as phone calls, personal interaction, etc.? 4 Will vendor personnel have regular physical access to Bloomberg facilities? For this engagement, will the vendor utilize Bloomberg's name as it relates to the product or service provided? 5 With regards to the services / products the vendor provides to the firm, does the vendor use subcontractors? 6 Where will this product/service be provided? (by country) For this engagement, will the vendor provide or execute critical processes /technology to / for Bloomberg(i.e., incur material profit loss or Bloomberg/Business Unit potential shutdown)? 7 8 If Yes Does this engagement provide critical processes/ technologies to more than one primary Bloomberg Business Unit? Provide the number of end users (e.g. Clients / Employees) who will potentially consume or receive products or services from this engagement? Are there competing vendors in the marketplace for the product or service that can handle the current scope and scale? What's the minimum amount of time it will take to EITHER transition to another vendor to deliver the needed product/service OR develop internal capability to deliver the needed product/ service? For this engagement, will the vendor have access to or handle employee/customer personal information (SSN, PHI, etc.) or Bloomberg confidential data, Intellectual Property data? If Yes Will the previously mentioned data cross country borders in this product or service? What is the volume of Personal Information (PI) / Confidential Information handled by this engagement? How will data be sent, provided, or accessed by this vendor? For this engagement, will the vendor have access to the Bloomberg systems? Will this engagement store / host data or applications outside of Bloomberg s firewall? Will any such application be Internet-facing? Will the vendor develop/build any applications or products containing Bloomberg Intellectual Property? 9

10 Supporting Organizations are engaged for high-risk engagements to perform due dilligence Contract Management NDA MA SOW Vendor Engagement Life Cycle Sourcing & Selection Due Diligence On-board Manage & Monitor Exit/ Renew Bloomberg s VRMA Engagement Business Impact & Risk Assessment Physical Access Critical Services/Technology Personal/Confidential Information Systems Access Interaction with Government Officials Activities subject to specific laws and regulations Nature of customer interaction Subcontractor Usage Geographic Locations Cloud Services Business Criticality & Risk Ranking Tier 1: HIGH Tier 2: MODERATE Tier 3: LOW Risk Assessment Leverage Bloomberg s Terminal functions to provide forward looking insights into risks by scanning and assessing a wide variety of vendor risk related data and predictive analytics Financial Viability Assessment Litigation Review Information Security Review Penetration Test Assessment DR/BCP Review Vendor Concentration Analysis (revenue /geography) Reputational Risk 10

11 Risks are Assessed, Mitigated and Tracked on a Risk Register Contract Management NDA MA SOW Vendor Engagement Life Cycle Sourcing & Selection Due Diligence On-board Manage & Monitor Exit/ Renew Bloomberg s VRMA Engagement Business Impact & Risk Assessment Physical Access Critical Services/Technology Personal/Confidential Information Systems Access Interaction with Government Officials Activities subject to specific laws and regulations Nature of customer interaction Subcontractor Usage Geographic Locations Cloud Services Business Criticality & Risk Ranking Tier 1: HIGH Tier 2: MODERATE Tier 3: LOW Risk Assessment Leverage Bloomberg s Terminal functions to provide forward looking insights into risks by scanning and assessing a wide variety of vendor risk related data and predictive analytics Financial Viability Assessment Litigation Review Information Security Review Penetration Test Assessment DR/BCP Review Vendor Concentration Analysis (revenue /geography) Reputational Risk Risk Register Track identified risks on risk register and work with business to: Assess impact across the enterprise Identify mitigating actions and controls Evaluate and sign-off on residual risk 11

12 How do we monitor suppliers on an on-going basis? And how do we automate it? 12

13 We want to monitor and be alerted to many categories of events that increase vendor risk 13

14 We own the leading tools needed to monitor Companies using investment grade data along with a platform and predictive analytics SPLC CL Bloomberg s VRM integrated solution RELS NEWS/ BSVC DRSK VRMA BMAP DRSK Financial Viability assessments RELS Corporate Relationships SPLC Supply Chain analytics, 4 th party revenue CL BLAW litigation reports NEWS News alerts & Social Media Velocity BMAP Dynamic geographical supplier analysis Bloomberg Terminal enables: One Stop Shopping - eliminates need for multiple vendor feeds by harnessing a broad range of supplier data, assessment capabilities, and analytics Push technology of forward-looking, quantitative estimates of supplier default probabilities Proper identification of active suppliers through rationalization of supply base with unique Bloomberg IDs Comprehensive view of supplier relationships and parent/child lineage Defines tiered supplier and customer relationships and revenue concentration Eliminates manual, prescriptive activities leading to proactive management of supplier risk 14

15 Category Managers and the Vendor Risk Team use a Real-time Supplier Monitor Fully customizable with ability to sort & filter on any column By clicking on ticker name and using tabs on top right, client has the ability to drill down into detailed Company Profile information, Financials, Legal and Supply Chain Analytics (see subsequent slides) Financial Viability Assessments (FVA) pass/fail criteria are based of Default Credit Risk Probabilities this is easily customizable by client based on risk tolerance thresholds Altman Z- Score Day Sales Outstanding Environment, Social, Governance score All News Event alerts/icons (listed below) are clickable for details Corporate Actions This icon is triggered by new corporate actions Major News New Company News # bars reflect new news volume Credit Ratings Agencies An icon will appear in second column if there is a ratings change for this company Social Velocity This icon is triggered by an unusually high # of social media postings on a company We color code suppliers that are borderline FVA pass (customizable to client requirements) News and Twitter sentiment Private Company Company Legal Name Parent Company Ultimate Parent Company 15

16 Company Profile with additional drill down capabilities, from people profiles and subsidiaries, to company news ESG Tab (Environment, Social, Governance) Social Media Tab Related Securities Tab (People, Subsidiaries, Affiliates) Ownership Tab Company News Tab 16

17 Financials (customizable) Default Credit Risk, multi-year Financial Statements, Credit Ratings & Altman Z-Score Tabs for additional drill down capabilities Financials Tab Credit Rating Agencies Tab Altman Z-Score Tab 17

18 Legal Profile with ability to search dockets and related legal news Insight to the total number of federal court cases involving the company Breakdown of cases by case type and time period Direct access to the docket sheets and underlying filings Altman Z-Score Tab 18

19 Supply Chain Analytics, identifying a companies suppliers, clients and peers All suppliers are clickable to easily identify 4 th party relationships Thermo Fisher Scientific Vendors (chart view) with associated revenue/ COGS concentration All clients are clickable to easily identify their SPLC relationships Thermo Fisher Scientific Clients with associated revenue concentration Thermo Fisher Scientific Peers Thermo Fisher Scientific Vendors (table view) sorted by revenue concentration high to low 19

20 Supply Chain Level News 20

21 BLOOMBERG MAP supplier geographic footprint with the ability to assess impact of natural disasters Mapping capability identifies business critical and high risk vendors by geography, based on location products/ services are delivered from. Additional capabilities include (1) filters by product/services category (2) ability to overlay natural disasters (currently available), Geo/Political risks and Pandemics (planned development) Hurricane Sandy Site Satellite Image 21

22 THANK YOU Chris Berger (646)