Third-party risk management (TPRM) is becoming more popular as business leaders and security professionals become more aware of the risks and compliance implications that cybersecurity failures pose. TPRM is now a formalized program in most large organizations, with several employees dedicated to it. Vendors are also becoming accustomed to having their security measures scrutinized through security questionnaires and such other assessment methods.
While security questionnaires are an excellent starting point for a TPRM program, TPRM professionals are becoming increasingly sceptical that they provide enough information to adequately identify and manage their third-party risk.
It can be difficult to have full confidence that vendors are in control of their cyber-risk. This is especially true because most businesses rely on these third-parties and entrust operational functions and sensitive data to them.
Businesses must establish an agile risk management program that prioritizes third-party risk management to overcome these obstacles. Here is a three-step approach to establish a third-party risk management program that enhances end-to-end process visibility.
Define and develop the program
The first step in determining what is working and, more importantly, what is not working in an IT and third-party risk management program is to define its current status. This involves a full audit of current vendors and the possible risks they pose; this provides executives with visibility into current risks, and identifies future risks that can be mitigated ahead of time. This method also allows businesses to establish new standards and objectives for a better third-party vendor program.
When designing a third-party compliance program, top-down sponsorship and bottom-up execution are also critical. Company-wide alignment transforms third-party vendor processes from a “check box” compliance exercise to a detailed, consistent process that emphasizes the importance of having a risk management program in place.
Enterprises should explore automating these processes and integrating with systems of record across the business to break down silos and make adoption more seamless. This will increase program effectiveness, increase operational efficiency, and, most crucially, support a risk management program that can expand to meet future workflows, compliance requirements, and processes.
Determine priorities and resources
One of the important reasons for executive sponsorship is that companies need to know what resources are available to make plans a reality. HR, IT, risk, and compliance stakeholders will all have a role in not only implementing but also determining the scope of a better third-party vendor program.
It’s critical to know which vendors could have the biggest impact on the company. Project stakeholders can prioritize risks by level of relevance and build an actionable strategy using this data, which is accessed through foundational assets such as effective risk management tools and solutions.
Implement program methodology
Defining metrics, in addition to assessing third parties, is an important step in developing a sound risk management program. The program methodology should include well-defined reporting requirements and target metrics, enabling for long-term evaluation. With the standards in place from step one, teams can track how cloud integrations contributed to overall improvements or how quickly possible risks were addressed, for instance.
Employee training is critical in this situation because everyone in the company must be able to easily navigate third-party risk management solutions. The complete risk management function should be included in training, as well as repeatable introductions to the change management difficulties that come with any new process, program or system.