Understanding Third-Party Risk Management better
Shankarlinga B S
Product Lead| Product Management| Digital Marketing Specialist| Content Writer| Content Creator
Third-party risk management (TPRM) is a type of risk management that focuses on identifying and mitigating risks associated with the use of third-party vendors.
Intro:
In the aftermath of many worldwide developments, insurance companies and financial firms are increasingly prioritizing third-party risk management. Specifically, greater outsourcing in a climate of rising pricing, reliance on digital technology, and the recognition that many organizational breaches are the result of trusted contractors who have been compromised.
What is Third-party risk management?
The vulnerabilities provided by an organization’s supply chain partners are known as third-party risks. Organizations can choose from a list of competitive overseas providers as marketplaces become more globalized.
The discipline is intended to help organizations understand the third parties they work with, how they work with them, and what precautions they have in place. The scope and needs of a third-party risk management programme vary greatly based on the industry, regulatory guidance, and other variables. Many TPRM best practices, however, are universal and may be used by any business or organization.
Example:?You might use a service provider like Amazon Web Services (AWS) to host a website or cloud application. If AWS goes down, your website or application goes down with it. Another example could be relying on a third party to transport products. If the shipping company’s drivers go on strike, it may cause delays in delivery times, as well as cancellations and distrust among customers, all of which may harm your company’s bottom line and reputation.
Why do certain organizations rely on Third-party suppliers?
Reduce costs, speed up production, distribution, and sales, or boost profits, all of which help businesses gain a competitive advantage in their respective industries. Organizations typically outsource to allow them to focus on their core competencies while also leveraging the knowledge of external providers to enhance their overall services.
So, how do you come up with a risk management programme for your company once you’ve incorporated these third parties to support your service offerings?
Conduct a third-party risk assessment, that will also help your company determine how risky all of these third parties are. Your company will be able to eliminate third-party risks to its operations and growth by implementing a well-designed risk assessment programme.
How to conduct Third-party risk assessments?
A typical connection with a third party is outlined by the third-party risk management lifecycle, which is a set of steps.
1. Identify the Vendors:
Organizations employ a variety of ways to identify existing vendors and construct a vendor inventory, including:
a)?Using data that already exists When deploying third-party risk software, companies frequently combine vendor information from databases and other resources.
b)?Using existing technology to integrate. CMDBs, SSO providers, contracts, procurement, and other systems, for example, frequently have precise vendor information. These sources are frequently used by businesses to concentrate their inventories in a single software system.
c)?Assessing or interviewing people. A quick survey of business owners in departments such as marketing, HR, finance, sales, research & development, and others can help you unearth the tools in use at your company.
2. Selection of Right vendor:
Organizations analyze RFPs and choose the vendor they want to use throughout the evaluation and selection phase. This decision is based on a variety of elements that are specific to the company and its requirements.
3. Conduct Risk Assessment:
Many businesses use a third-party risk exchange to get pre-completed assessments since risk assessments are time and resource expensive. Spreadsheets and assessment automation software are two more prominent techniques. In any case, the basic purpose of understanding the vendor’s risks is the same.
4. Make Risk Assessments Easier to Manage:
You must assure the quality of your assessments because they will have a direct influence on your risk management programme; basic check-box evaluations will not suffice. To accomplish this, you must thoroughly assess whether any vendor is risky, why they are, and how you (or they) can mitigate those risks.
5. Risk Mitigation:
Risks can be calculated and mitigation can begin when an assessment is completed. The stages of a typical risk mitigation workflow are as follows:
1.?Identifying risks and assigning a score
2.?Risk assessment concerning your organization’s risk appetite
3.?Validation of treatment and control in the context of your intended residual risk level.
4.?Constant surveillance for elevated risk levels.
6. Contracting and Procurement:
The contracting and procurement stage is crucial from a third-party risk standpoint, and it is sometimes done in tandem with risk mitigation. Contracts frequently include features that aren’t covered under TPRM. When analyzing vendor contracts, TPRM teams should keep an eye out for certain provisions, clauses, and conditions.
7. Establishing and maintaining connection:
Organizations must maintain compliance to build a robust TPRM. This is a crucial step that is sometimes ignored. At scale, keeping detailed records on spreadsheets is almost challenging, which is why many businesses use TPRM software. With auditable recordkeeping in place, reporting on essential components of your program and identifying opportunities for improvement becomes much easier.
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Benefits of Third-party Risk management:
Your firm may design and expand an effective TPRM management program that offers value to your bottom line using third-party risk software. When you use purpose-built software to automate your processes, the return on investment (ROI) is high.
Some of the benefits are listed below:
· Enhanced safety,
· Increased customer confidence,
· Increased time savings, cost savings, and efficiency
· There will be less work that is redundant.
· Improved data visibility
· Vendor onboarding is completed more quickly.
· Less complicated assessments
· Improved reporting abilities
· Audits will be simpler.
· There are fewer risks,
· better vendor performance, and
· fewer spreadsheets.
Best third-party Risk Assessment tools/software:
1. Tugboat Logic:?Tugboat Logic assists firms in preparing for audits in half the time and at a fraction of the expense, and responds to security questionnaires in minutes. Tugboat logic conducts an audit of your business and matches it to the appropriate rules and privacy controls. It aids organizations in keeping track of all vendor evaluations to provide better supplements. Tugboat Logic’s ideas are best suited for small and medium-sized businesses looking to gain the information and assistance needed to develop security programs and vendor assessments, as well as improve consumer transactions. It also assists businesses in obtaining internationally recognized certifications.
2. Silo Web Isolation Platform by Authentic8:?Silo Web Isolation Platform from Authentic8 is a comprehensive security and control layer that stands between the things you care about — programs, data, and devices — and the things you shouldn’t trust — websites, users, and unmanaged devices. Silo integrates security, identity, and data controls directly into the browser, removing the web’s risk and providing protection against vulnerabilities and misuse.
3. Security Scorecard:?Security Scorecard is a cyber security firm that rates business cyber security postures by performing a scored study of cyber threat intelligence signals for third-party management and IT risk management. Questionnaire responses are aligned with Security Ratings, Security Data, Marketplace, Assessments, and Professional Services in Security Scorecard’s Security Assessments. Instantly assess, comprehend, and continually monitor any organization’s security posture anywhere in the world. Throughout your supplier network, gain visibility into any organization’s security-control gaps and vulnerabilities. Advisory and managed services can help you improve your cyber security posture and Third-Party Risk Management (TPRM) program.
4. Drata:?Drata is a compliance and security automation platform designed to help businesses earn and keep the trust of their users, customers, partners, and prospects. Drata is used by several enterprises to automate SOC 2, ISO 27001, HIPAA, GDPR, and PCI DSS compliance, resulting in lower costs and less time spent preparing for annual audits.
5. One trust:?One Trust was founded in 2016 to provide privacy management and marketing compliance services. The Atlanta-based compliance monitoring provider offers One trust to help firms review customer, employee, and vendor data flows to comply with a growing list of global requirements. On a web-based platform, One trust provides privacy assessments, exchange of information mapping, repair activities, and regular audits.
Interested…??If you want to secure your organization from third-party risks…? Visit/Contact us at?Third-party & Risk management products?for a brief about how we,?TechBag Digital Pvt Ltd. can help your business reach its objectives with our robust SaaS services portfolio. Visit us to avail offers to choose?Tugboat logic,?Silo Web Isolation by Authentic8,?Security ScoreCard,?Drata?Products.
(TechBag is a software e-commerce marketplace that enables better decision-making for users while navigating through different software, and enabling vendors to reach a wider audience.)
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