Natural disasters, cyberattacks, data breaches, supply chain disruptions: just a few of the sudden shocks that can stun your company’s vendors and leave you struggling with unhappy customers and stakeholders.
Is your company's reputation in someone else's hands?
Organizational focus on third party risk has traditionally been reactive and determined by who is driving the activity. This has typically been procurement teams focused on suppliers and vendors, or brand and intellectual property (IP) protection functions focused on distribution channels and non-authorized manufacturers. Such a decentralized approach to risk has led to micro-focus on risk areas that interest certain parts of a business or functions. Organizations are only now starting to take a holistic proactive approach to risk, covering all categories of third parties and all areas of risk.
Recent examples of high profile business failures have demonstrated that Third Party Governance & Risk Management has not always been given the strategic attention it deserves. Inappropriate action or failure of third parties has created new risks that have significantly impaired the achievement of strategic objectives (e.g. business model with regard to third party ecosystem failing to achieve growth and profitability targets in strategic plan). This has also compromised organizational reputation, broken down business continuity and resilience and even attracted substantial penalties and regulatory enforcement action.
- Makes complex third-party governance easier to understand and manage
- Facilitates fulfillment of regulatory obligations and brings third party risks into a governance, risk and compliance program
- Enables consistent identification, assessment, treatment and monitoring of third party supplier risks
- Enables better monitoring of third party engagements and performance metrics.
- UNDERSTAND YOUR THIRD-PARTY RELATIONSHIPS
Catalog and assess which third parties your organization is using and how much risk they pose. Understand your third-party dependencies and associated risk to optimize third party performance and prevent surprises and losses.
- MONITOR THIRD PARTY RELATIONSHIPS
Stay current with new or updated vendor relationships and monitor material changes occurring in existing third-party relationships. Ensure that no material risk with third party relationships exists.
- MAKE DECISIONS AND TAKE ACTION
Make consistent decisions about third party risks in accordance with the risk appetite and tolerance of your organization. Ensure that risk treatments are implemented where appropriate. Consistently evaluate risk and apply controls and risk transfer techniques within your organization's risk tolerance.
But how do you identify which risks are most critical?
Pinpointing third party risks
An effective third-party risk management (TPRM) program will make your business safer and more secure. You’ll be able to identify and monitor current and future vendor risks while improving transparency in controls and related activities.
DataSecure’s comprehensive TPRM framework addresses strategy, structure, people, process and technology issues across the TPRM lifecycle, helping you:
- Assess your current environment.
- Increase the efficiency and effectiveness of vendor-related risk management.
- Develop a customized TPRM framework.
- Develop a risk stratification protocol to highlight risks by vendor.
- Implement and conduct effective TPRM activities, such as vendor assessments.
- Establish a comprehensive TPRM governance and reporting process.
Our TPRM team understands vendor risk. We’ve seen what can happen. We’ve helped clients prevent or recover from third-related disruptions. And we’re ready to help you implement a TPRM program that will strengthen your position and build more effective partnerships that protect your brand – and your business.
When you outsource operations, risk and compliance remain your responsibility. Don’t be blindsided by your vendor’s inadequacies. Let’s start the discussion today on how to protect your company
Third Party Management
Building a new third-party risk application from scratch is of course a big undertaking; so too is enhancing a current risk tool to do the new jobs. Firms should prepare for the project with a strong, dedicated team, and budget 3 to 6 months. One solution that some firms are using is an off-the-shelf workflow and risk management tool that can be easily customized to the organization’s specific needs.
- Do we have a single repository of all third parties (including traditional suppliers such as IT call- centers co-brand partners, fee-based services, joint venture partners, distribution partners)? If not, what will it take to build one?
- Do we have an inventory of due diligence tests? Are they clearly defined, with owners for each of due diligence tests, and with adequate training for the associates performing the test?
- Are the processes and standards consistent across BUs? Is there a robust governance and escalation framework?
- Do we have an effective risk-based segmentation (e.g., are small collection agencies appropriately categorized as high risk)?
- Do we actively monitor third parties for compliance to regulations that govern their activities? For example, do we audit calls made by call centers, review their internal policies, audit their operations to ensure adherence to letter and spirit of regulations? Do we have decent workflow tools to help with this?
- Do we have adequate documentation and an up-to-date narrative to demonstrate progress to the regulators?
The answers to these questions will determine the nature, length and required resources for the transformation.