The first step to forging any outsourcing relationship is putting your agreement in writing, right? Not if you want to get it right before something goes wrong.

Picture it: A ring of identity thieves gets its hands on your customers' account information because your check printing company didn't have the proper controls in place. No matter how sound the contract, the damage to your reputation has been done. "Many times all contracts give you is the ability to sue, so do your homework upfront," instructs Karen Grandstrand, an attorney with Fredrickson & Byron in Minneapolis.

Beyond practicing routine due diligence --such as checking into a vendor's reputation and financial resources --there are steps you can take to specifically reduce your risk of a privacy breach when relying on third party services. [For more on action to take --whether you're in the market for new vendors or reviewing your current partnerships --see the December 2004 issue of Bank Security & Technology Alert.]

Remember: No matter how well you do your homework upfront, don't neglect the relationship once it's in place. The due diligence you practice when selecting a vendor to work with should continue long after the contract has been signed, Grandstrand counsels.