Businesses everywhere leverage third parties to provide needed expertise or simply to get more done. While essential, outsourcing can also create vulnerabilities around data security, supply chain, compliance, financial viability, and more.
Assessing and monitoring third parties can be enormously time-consuming and prone to errors and omissions – especially when some or all of the work is done manually. And the growing complexity and variability of today’s third-party relationships only intensify the pressure. Just one oversight can trigger a raft of costly consequences, including fines for noncompliance, failed audits, and – perhaps most dreaded – security breaches.
An effective third-party risk management (TPRM) program starts with technology. The right technology adds consistency, clarity, and completeness to help you select the strong vendors and continuously monitor their strength throughout the entire relationship. Here are three ways TPRM technology can protect your organization:
Creates a central point of collection for all third-party information.
Each vendor comes with its own scope of service, compliance requirements, insurance coverage, contract terms, expiration dates, and more. If this documentation is spread across different departments – e.g., operations, legal, and procurement – it’s difficult to obtain critical information in a timely manner. Getting all contracts and key documents in a central, cloud-based platform simplifies tracking and makes it easier to share information across department lines. This helps ensure that nothing important slips through the cracks or falls out of compliance.
Delivers one, clear view of each vendor’s impact.
If a partner gets hit with a data breach, it’s your data, brand, and reputation on the line – and you need to be able to act quickly to minimize damage.
By consolidating all vendor information in one place, technology can instantly show you the full impact each supplier could have on the rest of your business. In connecting partners to critical processes, open issues, and compliance requirements, as well as specific locations or products and services, you can identify high-risk third parties and closely monitor their status.
Configurable vendor risk scoring and the ability to pull in external data feeds – such as financial and cybersecurity health ratings – make TPRM technology even more powerful. Predictive insights and modeling, for example, can automatically score the financial viability of a vendor. And AI can be used to regularly score cyber risk. You get a clear, current, and reliable view of your exposure to help identify weak spots and prioritize actions.
Slices and dices data in a useful, compelling way.
Today’s TPRM technology offers multiple, customizable views of third-party risk. You can look at all your vendors at once or group into categories – high risk, low risk, foreign-based, approved or rejected, those with expiring certificates of insurance, those out of compliance, and more. You also can group third-party suppliers by similar risk factors, such as those that manage personal information or use a high number of subcontractors. If a new data-privacy law comes into play, for instance, you can easily see which vendors have access to affected information and their compliance status on data-security requirements.
Successful third-party risk management protects your customers, your bottom line, and your reputation – and it all starts with understanding exactly who you’re working with and what risks they bring.