Article by : Galvanize
Jun 30, 2021 | Vendor Risk
Traditionally, third-party risk management (TPRM) has focused on procurement, executing contracts, managing relationships, and conducting quarterly business reviews. But with today’s organizations relying on vendors to fulfill core business objectives and support competitive advantages, these measures are no longer enough.
Stories of security breaches, regulatory fines, and economic losses due to third-party incidents are increasing in number. And although vendors are technically at fault, organizations are ultimately responsible. Since you can’t outsource liability, TPRM programs must manage this elevated level of risk.
Here’s some practical advice on how to integrate expanded TPRM processes into your current sourcing and procurement functions so you can oversee the entire vendor life cycle and scale your program to meet these new challenges.
Understanding your third-party risk
Your organization likely contracts with thousands of third parties, which may include suppliers, manufacturers, service providers, business partners, affiliates, brokers, distributors, resellers, and agents. While you likely have a process in place for onboarding vendors and verifying compliance, there are so many variables at play that it’s easy to overlook potential risks that could become issues over time.
Risks from third parties fall into a number of categories, including:
Let’s look at cybersecurity as an example of where you may find unknown risk. IT vendors make up just a fraction of your third-party ecosystem. However, in this sector alone, the average organization has 182 vendors connected to their system each week, and 58% of them believe they’ve incurred a breach as a direct result of a third-party vendor. Organizations often lack visibility into their IT risk: 57% don’t know if their safeguards are sufficient to prevent a data breach, and only 34% have a comprehensive inventory of all the third parties that touch their data.
It’s clear that in order to prevent unnecessary risk, your organization needs to develop a systematic approach to managing controls and assessing risk levels in real time.
Optimizing your third-party risk management
Consider these best practices for monitoring and managing your third-party risk:
By building and implementing strict protocols around your third-party risk management within a best-in-class integrated risk management solution, it’s easier to classify vendors and identify which ones must be monitored more carefully. You’ll also gain access to real-time data to help you spot problems immediately. And you’ll have access to streamlined workflows that will automate the bulk of your compliance initiatives.
Your third-party vendors are often your weakest link—but by carefully analyzing all of your risk and by enhancing visibility to spotlight problems and trends more quickly, you’ll be able to tighten controls and elevate your organization’s security from end to end.
Date of Input: 30/07/2021 | Updated: 30/07/2021 | nurmiera
Tingkat 2,
Blok F, Bangunan Sekolah Perniagaan dan Ekonomi(SPE),
Jalan Persiaran Tulang Daing,
Universiti Putra Malaysia,
43400 Serdang.