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One of the biggest risks credit unions face comes from the vendors they trust to help with their day-to-day operations. Core processors and other third-party vendors are often perceived as experts by the credit unions that hire them, but that perception can breed unwarranted complacency. Outsourced technology providers have been known to expose credit unions to substantial security risks. And even the largest core processors have been known to make computational errors that result in inaccurate records.

To protect themselves and their members, credit unions need to negotiate comprehensive vendor contracts that clearly outline the vendor’s responsibilities and place liability on the vendor for any problems that surface. Without a solid contract, credit unions could face immense legal liability for problems caused by their vendors.

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