In today’s interconnected and international business world, third party risk management is vital to your organisation’s risk management strategy.

Third-party relationships introduce significant risks to your business, whether with suppliers, vendors, or service providers. These risks include data breaches, intellectual property theft, supply chain disruptions, and legal and regulatory compliance issues.

With the right policies, procedures, and monitoring, you can effectively manage the risks associated with third-party relationships. You can also mitigate the potential impact of any incidents or breaches. So, it’s crucial to take a proactive approach to do so.

This post sets out our approach to managing the risks of third parties.

You need a programme

You must have a third party risk management programme to manage third party risks effectively.

The programme involves identifying and assessing the risks associated with each third-party relationship and developing policies and procedures to mitigate those risks. It should also include ongoing monitoring and management of third-party relationships, as well as a response plan for any incidents or breaches that may occur.

What the programme would look like

Identify and assess the risks

The first step in developing a third party risk management program is to identify and assess the risks associated with each third-party relationship.

This step can involve conducting risk assessments, questionnaires, and audits to understand the risks posed by each third party. The assessment should take into account the following:

  • the nature of the relationship,
  • the sensitivity of the data or information shared,
  • whether data is personal data and will be transferred to another country, and
  • the potential impact of a breach or disruption.

Develop policies and procedures

Once you’ve identified and assessed the risks, you should develop policies and procedures to mitigate those risks.

You should include these policies and procedures in contracts with third parties, covering data protection, information security, and legal and regulatory requirements compliance. It’s worth also providing training and awareness to ensure that your personnel and third-party providers know the risks and how to mitigate them.

Monitor and manage relationships

Ongoing monitoring and management of third-party relationships are essential to identify and address risks promptly.

Relationship management involves:

  • regular audits and assessments of third-party activities,
  • continuous monitoring of third-party performance, and
  • automated alerts to identify potential issues.

Manage incidents

Finally, creating an incident response plan and procedures to address any possible incidents or breaches would be best. The plan should outline the steps to be taken in the event of a breach, including notification of affected parties, containment of the breach, and investigation and remediation of the cause.

Never manage third party risks alone

While it may be tempting for you to handle third-party risk management on your own, we don’t recommend it.

Without the expertise, skills, and resources of third party risk management professionals like our team, you’d probably struggle to manage the risks of your third-party relationships effectively. By working with us, you’d take the necessary steps to manage these risks and protect yourself from harm.

Actions you can take next

  • Start or strengthen your third party risk management programme by asking us to guide you in doing so.
  • Manage risk assessments efficiently by asking us to evaluate what software can support you.
  • Worry less about managing the risks of third parties by outsourcing your risk assessments to our team.