Third-party vendors are critical to businesses, ensuring operations run smoothly and efficiently through seamless collaborations. However, this collaborative approach also exposes them to certain risks within their work environment. When contractors complete a project, for example, any left over key cards, passwords or other credentials can pose a risk if not deleted. As a result, the organization's security, regulatory compliance, operational integrity, financial stability and brand reputation become vulnerable.
According to a September 2022 Gartner survey involving 100 executive risk committee members, 84% of the respondents mentioned that third-party misses resulted in disruption of operations. In the same study, 66% of the participants said it had an adverse financial impact on organizations and 59% agreed that it affected brand reputation.
Companies often need help with their current processes despite establishing third-party risk management policies. These existing methods, which involve emails, spreadsheets and isolated risk management tools, are time-consuming and prone to errors. Unfortunately, these tools cannot effectively monitor and control the diverse threats from a network of suppliers, staffing agencies, consultants and contractors.
Automating vendor risk assessment and management
By embracing risk management automation, businesses can significantly reduce the time spent on manual diligence and instead allocate their resources towards proactively preventing new threats.
Implementing the right software for automated risk control enables companies to modernize their reporting of third-party risks and issues. It also streamlines the assessment and remediation processes, fostering efficiency. Additionally, automation facilitates transparency and accountability in vendor relationships while effectively connecting risk control to overall business success.
Automated third-party risk management offers several benefits, some of which are summarized below:
- Increase in employee and vendor efficiency with systematized tasks, quick responses, more confidentiality in issue resolution and higher productivity.
- Enhanced business continuity with intelligent decision-making and limited exposure to risk due to continuous monitoring.
- Integration across the enterprise with contextualized third-party risk embedded into workflows and smooth collaboration with vendors through a common portal.
TPRM (Third party risk management):
Regulators and governing bodies have recognized third-party risk's significance and responded with increased regulations and scrutiny. Organizations must develop comprehensive third-party risk management programs to meet compliance mandates and strengthen IT security controls.
TRPM experts identify organizations' challenges in complying with third-party risk management regulations, guidelines and standards. A comprehensive range of third-party risk management services helps businesses achieve compliance while effectively mitigating vendor risks. By mapping the capabilities of offerings to the requirements outlined in major cybersecurity frameworks, security experts demonstrate how they can support your risk management efforts.
A holistic TPRM implementation methodology involves a multi-step approach that includes setting engagement rules based on an organization's risk tolerance and security policies, incorporating these rules into third-party contracts, conducting risk assessments through questionnaires, measuring performance against service level agreements, continuously monitoring third parties for compliance and remedying any deficiencies that may arise.
The unified third-party risk management program empowers security leaders to address risk at every stage of the vendor lifecycle. It combines automated assessments with continuous threat monitoring, enabling an organization to simplify compliance, reduce security risks and improve operational efficiency.
TPRM features and functionalities:
Dashboards and reporting
An organization gets visibility into its vendor tiering, risk evaluation plans, open issues and all possible threats across the third-party ecosystem. This could mean accounts or physical locations third-parties can access at any given time. Platform dashboards can be customized, and reports scheduled as per business priorities.
All vendor contacts and interactions get centralized in a database to eliminate inefficient email communications and status tracking via spreadsheets. The portfolio records different vendors' products or services and their assessment details. The organization can set up vendor hierarchies and create specific vendor engagements as the supplier ecosystem gets more complex.
Risk assessment workflows allow users to seamlessly track evaluations from start to finish. Whether assessing a vendor's internal tier or monitoring risk based on assigned classifications, organizations can evaluate specific risk categories such as financial, reputational and security risks. The platform's automated scoring system utilizes a configurable scoring methodology and risk engine, ensuring accurate and efficient risk evaluation responses.
Intelligent risk feeds
To ensure comprehensive monitoring of suppliers, third-party risk managers can leverage various integrations. These integrations enable effective operational, financial, ESG, geopolitical, compliance and cybersecurity risk evaluation. By utilizing intelligent risk feeds and ratings, organizations gain valuable insights into vendors' risk posture, enabling informed decisions regarding vendor selection and retention.
Remediation of issues
The third-party risk assessment program facilitates seamless cross-functional collaboration for effective issue management based on risk evaluation. When a problem is detected, engaging vendors and subject matter experts in finding remedial solutions become effortless. Teams can easily associate issues with risks, risk ratings and controls at both assessment and questionnaire levels. A status column highlights critical issues impacting a vendor's risk posture, prompting immediate attention.
Enhancing third-party risk management
Amidst supply chain disruptions, inflationary pressure and escalating cyber threats, organizations must evaluate their reliance on third parties and reassess their operational resilience.
Risk management enables organizations to leverage automation, advanced analytics and AI-ML tech for controlling third-party risks efficiently by simplifying, identifying and categorizing risk factors such as corruption, bribery, financial crime, theft and data privacy issues to ensure that relevant actions are taken before they cause any damage to the business and its stakeholders.