Some firms are often working with a series of service providers to focus on the main part of the business while saving on costs. For this to act fruitfully, firms should grant access to their service providers, both analog and digital, to the assets of the company. It proves risky to service providers with information security breaches at the service provider that would damage the company. Managing third party risk should be dealt with a fine hand without disrupting operations of the organization.
As reported by Gartner, about 60% of the firms operate with over 1000 third parties. The better reliance introduces notable risks that include disruption to operations and greater cyber threats. Companies should adopt third party risk management programs to safeguard against risks and ensure better business continuity. However, the integration of TPRM into the existing business operations proves complex, leading to disruptions whenever handled improperly. In our post today, we are going to highlight some of the core strategies for the effective implementation of TPRM without impacting the flow of your business.
What Is Third Party Risk Management (TPRM)?
Third party risk management is defined as the process followed in the identification, assessment, and control of risks associated with third parties in a business enterprise, with particular emphasis on vendors and service providers. In particular, with a growing number of businesses outsourcing diverse operations, certain risks, including operational vulnerabilities, compliance nonconformities, and cyber security threats, can be regarded as rather acute.
TPRM includes an approach to managing these risks across the third-party life cycle. Incorporating TPRM or fourth party risk management assists organizations in minimizing, addressing, or managing the consequences of third parties’ failures or breaches on business operations, regulatory requirements, and reputation and assets.
Key Steps to Implement TPRM Without Disrupting Operations
As mentioned, carrying out TPRM successfully involves a good plan that should be integrated properly within the current processes. This process should be carried out systematically such that there are no interferences in the process. This way, in case your firm is already implementing TPRM, you will make sure that your framework helps not only to manage risks but also to boost the efficiency of your operations. Here are the key steps to help you achieve a smooth and successful TPRM implementation to keep businesses safe from cyber attacks:
Conduct a Thorough Risk Assessment
Before implementing TPRM, it is recommended that you evaluate the risks of all business relations with third parties. This includes identifying the other third parties, knowing the type of services they offer, and assessing the risks they are likely to bring. Ensure that you select a good risk assessment method so that the results are as accurate as possible.
Develop a Clear TPRM Policy
A good TPRM policy acts as the framework for TPRM implementation. It should explain the coverage of third party risk management, its goals, and the processes that will be followed. Make sure that the policy is agreeable to the organization’s risk tolerance and complies with requirements.
Engage Stakeholders and Secure Buy-In
TPRM implementation involves engaging other critical stakeholders in the organization’s management, such as senior management and procurement, legal, and Information technology departments. Always involve these stakeholders right from the starting point to ensure that they support your plans. You may need to get their commitment by explaining well the importance and gains that are likely to be had once TPRM is put into practice.
Implement a Centralized TPRM Framework
The centralized TPRM reduces the risks of mistakes and increases the efficiency of managing third party risks. One can use a central database to record all third party activities, risk management, and compliance. This approach of tokenization also aids the proper coordination and supervision in the C2 center.
Establish Clear Roles and Responsibilities
Assign clear TPRM responsibilities to implementers in the process. This comprises delegating specific roles in third party risk management, such as post and staff or teams, to conduct the assessments and establish the risk mitigation measures. Specific responsibilities are critical in ensuring that TPRM undertakings are performed well.
Integrate TPRM into Existing Processes
Therefore, coordinate TPRM with existing business processes and activities to ensure that it does not disrupt the organization’s standard procedures. This can be done using TPRM activity integration within procurement, contract management, and vendor assessment. Make TPRM a consideration throughout the third party lifecycle, from initial selection through the discontinuation of business with the third party.
Leverage Technology and Automation
TPRM generally operates through the use of technology to simplify TPRM tasks. Integrate TPRM software and automate risk assessment, third party activity tracking, and compliance reporting. This helps eliminate many manual controls and prevent or at least reduce the degree of errors to make TPRM a much smoother process.
Provide Training and Awareness Programs
Every employee should be educated and communicated to raise awareness of the significance of TPRM and the duties to be performed. Seminars should be held frequently to ensure employees are aware of TPRM policies. They are useful in creating awareness of risks to the staff within the organization.
Conclusion
Investing in third party risk management is critical for organizations that want to maintain their reputation, minimize expenses, and strengthen security and compliance. It goes a step further by preventing risk occurrences while at the same time leading to the establishment and sustainability of businesses. New TPRM measures will emerge regularly and should be appropriately integrated into daily operations.
