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Concentration Risk: The overreliance on a single vendor to conduct business when that vendor provides many products and services, particularly if this vendor is classified as critical. An institution may not be able to conduct business if a catastrophic event strikes and hinders a vendor providing many services. Another concern is the geographic concentration of a vendor. If an institution and its third-party vendors or subs are in the same region, the same event could affect everybody’s operations since they all rely on the same infrastructure. Management of concentration risk includes diversifying vendors or having a solid back up plan in place.

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