The Challenge Most Businesses Face
With the development of digital transformation, the extent to which businesses depend on third parties has surged in the last few years. Third-party dependencies are becoming increasingly common as businesses find it easier to connect and scale their operations across various regions and countries. They’re also harder to track and monitor, making it difficult for businesses to ensure third parties and even fourth parties are fully meeting their requirements. This is why many businesses are turning to the top GRC software vendors to find simple solutions to their risk management and compliance needs – here is where we step in.
A Solid Supplier Assurance Program is the Answer
The solution to these management pains is a structured scalable Third-Party Risk Management program that can grow as your business develops. An effective Third-Party Risk Management (TPRM) process allows businesses to be proactive instead of reactive, identifying, assessing, and managing third-party risk throughout the vendor lifecycle. It will also enable the company to feel confident in its risk position.
More Than a Tick Box Exercise
Two-thirds of businesses indicate that their TPRM programs are in the earlier stages of maturity. Although most firms have established some form of third-party risk program, with understanding and awareness on the rise, they still are unable to assess all of the vendors that matter. Many struggle with simple elements of TPRM, such as:
- Identifying and documenting vendors
- Conducting initial due diligence
- Assessing and reassessing vendors when needed
- Consistent reporting of third-party risks
Often, this is due to organisations stretching resources and technology across what is quickly becoming a dynamic and complex process of managing third-party risk – essentially, they are trying to ‘run before they can walk.’
To tackle this, businesses need to start viewing TPRM as a journey rather than something that can be fixed overnight. To progress a Third Party Risk Management program, organisations need to view the journey in key steps instead of taking the ‘nuclear’ approach and attempting everything at once. It’s a constantly evolving process designed to help businesses stay resilient in a fast-moving environment with ever-changing suppliers.
As Your Third-Party Risk Program Matures…
Companies need to consider the level and limits of their available resources. As your team begins to grow, so will your third-party risk processes. As these formalise, you must ensure the processes are documented and aligned to your TPRM program objectives.
Organisations should have a list of third-party vendors, then move on to vendor tiering to determine how much attention each vendor should be given and how closely they need to be assessed and monitored. Once established, these vendor tiers can be used as templates for onboarding and categorising future vendors.
Check out the full table on our handy infographic!
To decide on the approach you will take for tiering, you must know your key stakeholders’ focus, i.e. risk vs financial focus.
To learn more about effective tiering, read our blog ‘Tiering 101: The Most Effective Method to Ensure You Are Assessing The Right Vendors’.
Asking the Right Questions
Now that your tiering is sorted, it’s time to examine your risk profiling. Assessment questionnaires, which establish whether or not a vendor has sufficient security controls in place, help build risk profiles. It’s a good idea to categorise targeted questions based on what vendors provide to the business.
It’s important to note at this stage that most organisations will want to work with vendors to fill in any security gaps. The right approach and attitude can make this a mutually beneficial process. Assessments can even become more targeted for vendors with a particularly big role to play.
It’s important to note at this stage that most organisations will want to work with vendors to fill in any security gaps. With the right approach and attitude, it can be a mutually beneficial process. Assessments can even become more targeted for vendors with a particularly big role to play.
Top Tip: It’s a good idea to separate questions into categories such as Physical Security, ABC, Governance, Access Control, etc., which will allow third parties to be ‘ranked’ in areas in which they’re strong and also areas in which they may fall short.
For more information on questionnaires, read our paper on writing effective third-party questionnaires.
The Next Step: Onboarding a Tool That Works for Your Business
Sooner or later, there will be a tipping point for businesses as they grow, and so will their list of vendors! They will need to level up their Third Party Risk Management process. A smaller company may be able to manage this process manually using spreadsheets, but that will rapidly become unsustainable as a way of tracking which vendors have answered what. Eventually, organisations will need a dedicated software solution tool that is scalable from the outset, leveraging the resources that become available as the business evolves.
If this is your business, why not get started by checking out our tooling paper that guides you through picking the right software solution for you.
SureCloud’s Third-Party Risk Management Program
SureCloud offers a range of services and products that speak directly to issues dealing with third-party vendors. We understand the pain points, such as assessment fatigue, that weigh heavily on businesses’ time. This is why we’re regarded as one of the top GRC software vendors. As a result, we have put together intuitive, integrated solutions that make our clients’ lives easier. For more information, take a look at our Vendor Risk Management offerings.