Third-party risk management is vital. By implementing these TPRM best practices, you can protect your business, employees, and customers without having to spend big money on security measures. Whether you’re a start-up or an established organization, it’s time to take your TPRM to the next level.
In the modern era, outsourcing is something that most major businesses do, like Apple, Microsoft, Walmart, Amazon, and Disney. Naturally, small businesses like to outsource, too. According to Exploding Topics, 37% of small businesses outsource at least one department to a third party, highlighting just how popular this trend has become.
There’s no denying that outsourcing is great for your business, especially if you’re looking to reduce costs and increase efficiency. However, outsourcing and using third-party vendors does come with some risks, and these are risks that you can’t afford to ignore.
For example, if you’re doing business with a third-party vendor and they fall victim to a cyberattack, then the cyberattack could ultimately impact you as well. This is why third-party risk management should be your number one priority heading into the new year. To get you moving in the right direction, here are the 5 TPRM best practices that any business can implement.
Use GRC Software for Better Protection
GRC software will have a hugely positive impact on your third-party risk management. This is because it enables fast and easy management of all your third-party risks. If a risk is identified, you’ll know about it straight away, enabling your business to act fast and protect itself from any outstanding threats.
The best part about using GRC software is that it enables you to manage your portfolio of third parties from a single source. Want to operate like a modern business? Then this is how you do it. Finally, you’ll no longer have to worry about risks associated with using the services of third-party companies. Instead, you’ll be able to sit back, relax, and focus on other important business tasks.
Complete Your Due Diligence
Next, you must complete your due diligence on all existing and future third parties you collaborate with. Essentially, this is the process of vetting the third party to uncover any potential red flags, such as compliance and industry reputation. During the onboarding process, due diligence is particularly important. If any red flags that seem likely to affect your business negatively are uncovered, you can terminate the partnership before it officially begins.
Prioritize Fourth-Party Risk Management
It’s important to remember that third-party risk management and fourth-party risk management are intertwined. For example, if you’re receiving products from a third party, you need to know whether that third party is creating those products or is being subcontracted to a fourth party. If so, you also need to engage in fourth-party risk management, which (again) involves collecting as much information as you can on them.
Also, you should make it clear to any third-party companies you work with that they have to inform you about any fourth-party involvement. To be safe, put this in any contract you sign so there’s no deception or confusion.
Know the Most Important Factors for Analysis
When choosing third-party vendors in the future, you need to know the most important factors to analyze. These factors include:
Remember, a third-party vendor might tick all the right boxes excluding one. In this case, you can’t afford to ignore the red flag (even though everything else is perfect), so make sure you address this and take action.