Door Dash
Similarly, Door Dash experienced a data breach exposing customer data that was traced to a third-party vendor.
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What is Third Party Risk?
Businesses rely on third-party vendors to deliver a range of products and services. However, despite the benefits, collaborating with third-party vendors increases the level of risk from data breaches, data privacy and security, regulatory requirements, and reputational risks. While it may seem like third-party risks are someone else’s problem, the reality is the opposite.
In today’s world of escalating data breaches and increased regulatory requirements, exposure can come from your own network or a contracted vendor. In fact, cybercriminals often seek out vulnerabilities in one company’s network to gain access to other companies, which is referred to as a supply chain attack.
What is Third-Party Risk Management?
Third-party risk management (TPRM) refers to the process of identifying, assessing, and mitigating the risks associated with working with third-party vendors. With the expanding network of partners and suppliers, TPRM is a necessary process to protect your organization from potential business interruption, financial loss, data breaches, and other security threats that could result from your third-party relationships.
TPRM programs enable businesses to maintain an accurate and up-to-date understanding of their third-party vendors, prioritize risk levels, allocate resources to mitigate significant risks, ensure compliance and provide the necessary reporting for compliance regulations.
Why is Third-Party Risk Management Critical?
Third-party vendors are integral to almost every business in today’s digital age, as companies outsource IT operations, customer service, supply chain functions, and more. However, the increasing number of data breaches originating from third-party vendors highlights the importance of effective vendor risk management.
What are some common reasons for implementing TPRM?
Increasing regulatory requirements around third-party risk.
Requirement for cyber insurance coverage.
Growing reliance on third-party vendors for critical business functions for which interruption could be disastrous.
Being acquired by an investment company that requires TPRM.
Changes to the organization’s threat landscape, such as industry consolidation or new entrants to the market.
Corporate governance mandates TPRM.
Shifts in the risk appetite of the company’s stakeholders due to changing external or internal factors.
Expansion into new locations with different data privacy regulations.
The need to comply with industry-specific regulations and standards.
Data Breaches From the Headlines
59% of organizations reported experiencing a data breach caused by a third party.
With 54 % of these occurring within the past 12 months.
Implementing a TPRM Program
Companies face ever-evolving threats from cybercriminals, and third-party vendors can provide an easy entry point for attackers. By implementing a TPRM program, companies can identify and mitigate the risks posed by third-party vendors, including but not limited to cybersecurity, reputational, compliance, and financial risks.
By adopting a TPRM program companies can reduce their legal liabilities and improve their status as trusted custodians of sensitive information. With the high cost of data breaches and the potential damage to businesses’ reputations, TPRM is an essential priority for today’s business leaders.
What are the Main Elements of a TPRM Program?
When it comes to third-party risk management, there isn’t a one-size-fits-all approach. Instead, a third-party risk management program should be built based on a company’s individualized goals and risk profile.
A program should help organizations detect and mitigate risks associated with outsourcing to third-party vendors and service providers. The main elements of a TPRM program include screening potential partners, conducting due diligence, and monitoring relationships throughout their lifecycle. It also involves analyzing and minimizing potential business risks and ongoing assessment of the risk posed by third parties.
TPRM programs include the following elements:
- Risk identification and assessment of each third party, including the potential operational risk.
- Third-party screening, which entails researching and verifying third parties.
- Due diligence and conducting in-depth reviews that evaluate the third party’s compliance with relevant laws and regulations, their security posture, reputation, and track record.
- Monitoring and reviewing the third party’s security posture and performance, as well as any changes to their operations.
- Incident management to develop a plan for responding to any security breaches or other incidents.
- Risk remediation for reducing the organization’s exposure to risks posed by third-party vendors, such as increasing security measures or discontinuing the relationship.
TPRM Best Practices
Organizations must develop a robust third-party program to protect themselves from potential risks. Organizations should develop a framework that includes policies and procedures for selecting, onboarding, monitoring, and terminating vendors to manage third-party risks effectively.
In addition, automation can help streamline the process of managing vendor relationships while collecting data from vendors, allowing you to identify any potential risks or areas of improvement in the TPRM program.
Additionally, leadership must be engaged and involved to ensure all third parties have been properly vetted before onboarding them.
Here are some best practices to consider when creating a TPRM program:
By following these best practices, businesses can reduce their exposure to risks posed by third-party vendors and protect their operations from potential damage.
Third-Party Risk Management (TPRM) and CoreComply
Coretelligent’s CoreComply offers an all-in-one solution for addressing TPRM. CoreComply automates TPRM activities, streamlining vendor onboarding and simplifying ongoing monitoring and reporting activities. In addition, it helps to provide a comprehensive view of vendor risk posture across all vendors in an organization’s supply chain, helping organizations make informed decisions.
If you’re looking for an effective way to manage your organization’s TPRM, contact Coretelligent today to learn more about how CoreComply can help your business streamline and simplify vendor risk management.
Solve TPRM with CoreComply
With integrated risk assessment tools, automated workflows, and customizable dashboards, CoreComply helps organizations easily identify, monitor, and manage vendor risk. CoreComply’s reporting capabilities provide clear insights into vendor risk, enabling organizations to make data-driven decisions and ensure regulatory compliance. Additionally, CoreComply’s real-time alerting system ensures organizations are immediately notified of any risks or changes in risk posture, allowing them to take swift corrective action if needed.
