Common Third-Party Risk Management Challenges and How UK Teams Overcome Them

Third-party risk management (TPRM) is no longer optional for UK organisations.
As supply chains expand and outsourcing increases, organisations are expected to manage the risks introduced by suppliers, vendors and partners with the same rigour as internal risks.

In reality, many organisations struggle to implement third-party risk management in a way that is consistent, scalable and defensible. This article breaks down the most common third-party risk management challenges faced by UK teams and explains how mature organisations overcome them in practice.

Third-party risk management is the structured process organisations use to identify, assess, mitigate and monitor risks arising from external parties. These risks typically include information security, data protection, operational resilience, financial stability and regulatory compliance.

In the UK, third-party risk management is often driven by customer expectations, regulatory scrutiny and the increasing recognition that risk does not stop at organisational boundaries.

Third-party risk management is difficult because accountability sits with the organisation, while control sits with the supplier.

As supplier ecosystems grow, many organisations inherit risk faster than their governance models can adapt.

The challenges below are not edge cases. They are recurring failure points across financial services, technology, professional services and the public sector.

A foundational third-party risk management challenge is poor visibility of supplier risk. Many organisations cannot confidently answer basic questions such as:

1. Which third parties we rely on

2. What data they access

3. How critical they are to operations

This is usually the result of fragmented procurement processes, decentralised ownership and spreadsheet-driven tracking.

How UK teams overcome this

More mature organisations establish:

1. A single, authoritative inventory of third parties

2. Risk-based classification tied to data access and criticality

3. Clear internal ownership for each supplier relationship

Visibility is not a reporting exercise. It is the prerequisite for meaningful risk control.

Another common issue is inconsistent third-party risk assessments. Different teams assess suppliers using different criteria, questionnaires and scoring methods, making comparison and prioritisation almost impossible.

This inconsistency weakens decision-making and exposes organisations during audits and due diligence.

How UK teams overcome this

UK organisations address this by:

1. Standardising assessment criteria across the business

2. Aligning assessments to recognised standards and regulatory expectations

3. Applying tiered assessments proportionate to supplier risk

Consistency enables teams to focus attention where it matters, rather than spreading effort evenly across low-risk suppliers.

Many third-party risk programmes rely too heavily on supplier questionnaires and self-attestation. While questionnaires have value, they provide limited assurance and often reflect policy intent rather than operational reality.

This creates blind spots, particularly for high-risk or critical suppliers.

How UK teams overcome this

Organisations reduce reliance on self-attestation by:

1. Requesting evidence proportionate to risk

2. Recognising independent certifications where appropriate

3. Treating risk assessment as an ongoing process, not a one-off event

The goal is not more paperwork. It is better assurance.

Third-party risk management often breaks down as organisations grow. Manual workflows, spreadsheets and email-based approvals do not scale when supplier numbers increase.

The result is delayed onboarding, incomplete assessments and growing operational risk.

How UK teams overcome this

Teams that scale effectively:

1. Apply risk thresholds to reduce unnecessary assessments

2. Automate repeatable processes

3. Focus detailed reviews on suppliers that genuinely introduce risk

Scalability is a governance issue, not a tooling problem alone.

Third-party risk management frequently fails due to limited internal engagement. Procurement, IT and business teams may see TPRM as a compliance hurdle rather than a risk management discipline.

When this happens, processes are bypassed or deprioritised.

How UK teams overcome this

Organisations improve engagement by:

1. Defining clear roles and accountability

2. Embedding third-party risk into procurement and onboarding

3. Linking risk decisions to operational and commercial outcomes

When risk management supports delivery rather than blocking it, engagement follows.

A common weakness is focusing on onboarding assessments while neglecting ongoing third-party risk. Supplier risk changes due to incidents, growth, subcontracting and regulatory shifts.

Static assessments quickly become irrelevant.

How UK teams overcome this

UK organisations manage this by:

1. Scheduling reassessments based on supplier risk

2. Monitoring incidents and changes that affect risk exposure

3. Integrating third-party risk into broader enterprise risk management

Risk management only works when it keeps pace with change.

Many organisations struggle to demonstrate effective third-party risk management to regulators, auditors and customers. Inconsistent documentation and informal decision-making make assurance difficult.

This becomes critical during regulatory reviews or procurement due diligence.

How UK teams overcome this

Mature organisations:

1. Document risk decisions and acceptance clearly

2. Maintain audit trails across the supplier lifecycle

3. Align third-party risk management to recognised frameworks

Good documentation is not bureaucracy. It is organisational memory.

Organisations that manage third-party risk effectively tend to share the same characteristics:

1. A genuinely risk-based approach

2. Clear ownership and governance

3. Proportionate, scalable processes

4. Ongoing monitoring rather than static assessments

Third-party risk management works best when it is treated as a core risk discipline, not a procurement checkbox.

1. Most third-party risk management challenges are predictable

2. Poor visibility and inconsistency are the most common failure points

3. Questionnaires alone provide limited assurance

4. Ongoing monitoring is as important as onboarding

5. Strong governance matters more than complex processes