Understanding the Key Differences Between TPRM and GRC

Organizations face multifaceted governance, risk management, and compliance challenges in today’s dynamic business environment. These challenges necessitate a structured approach to align processes, technologies, and people within the organization for effective risk-based decision-making. 

But what exactly is involved in GRC, and does it adequately address the risks external parties introduce? This question is more significant, considering that more than 60% of data breaches involve a third party in some capacity. Today, the extended enterprise has become a significant concern in the modern business environment characterized by outsourcing and globalism.

This blog will explore GRC and its relationship with Third-Party Risk Management (TPRM). We’ll learn how GRC can be extended to include external business relationships and provide a comprehensive GRC management strategy encompassing internal risk factors and those introduced by external parties and tools. 

What Exactly Is GRC?

GRC starts with three core components: Governance, Risk, and Compliance. These elements are vital in shaping the organization’s strategy for risk-based decision-making. Let’s break down what each of these components entails:

• Governance (G): This is the foundation of GRC. It involves defining business goals and setting up business processes and organizational oversight to ensure these goals are achieved. In essence, it’s about establishing a framework for governing the organization.
• Risk (R): The ‘R’ in GRC stands for risk management. It entails employing risk management principles to safeguard the organization’s goals. This includes processes like IT risk management to gain visibility into potential cyber risks that could impact the business.
• Compliance (C): The ‘C’ involves ensuring adherence to regulatory and industry frameworks aligned with established governance and risk management practices. Compliance is essential for maintaining organizational alignment with best practices and legal requirements.

What is TPRM?

Third-party risk management (TPRM) manages the risks associated with using any outsourced processes, products, or services. This includes the identification, assessment, and mitigation of those risks. The goal of the TPRM process, sometimes called Vendor Risk Management (VRM), is to allow organizations to take advantage of the benefits of working with third parties while protecting their sensitive information and assets from risks that third parties expose them to.

How is Third-Party Risk Management Related to GRC?

Although GRC primarily refers to an internal organizational structure, in today’s multiple-vendor work environments, many fundamental risk management practices must be extended to include external business relationships. This outward-facing subset is known as Third-Party Risk Management (TPRM). TPRM is an extension of the business’s risk management activities and protects revenue-generating third-party activities by managing risks associated with external relationships.

TPRM provides organizations with the ability to:

• Identify and manage IT risks introduced by third-party relationships
• Ensure an acceptable level of partner risk
• Measure vendors’ adherence to compliance requirements

GRC and TPRM: A Comparison

GRC and TPRM represent different levels of scope and purpose within an organization’s GRC t framework. Let’s clarify why they are not exactly an ideal pair to compare.

• GRC (Governance, Risk, and Compliance) is a broader and more comprehensive framework that covers all aspects of governance, risk management, and compliance within an organization. On the other hand, TPRM (Third-Party Risk Management) is a subset of GRC that focuses solely on managing the risks associated with third-party relationships. Therefore, it’s not a suitable comparison because they exist at different levels of hierarchy and scope.
• GRC and TPRM are not two independent or opposing concepts; instead, they are closely related. TPRM is a component of GRC designed to address specific risks associated with external parties. Comparing them would be like comparing apples to a slice of apple pie – the pie is made from apples and represents a smaller part of the whole.

In other words, GRC and TPRM are not directly comparable because they serve different purposes within an organization’s risk management strategy. GRC provides the overarching framework and strategy, while TPRM is a specialized area within GRC that deals specifically with third-party risks.

While GRC and TPRM are distinct concepts, they share similarities in their outcomes. Both seek to manage and mitigate risks in their respective environments.

Differences Between GRC and TPRM:

Aspect	TPRM (Third-Party Risk Management)	GRC (Governance, Risk, and Compliance)
Scope	Concentrates primarily on risks associated with external parties and third-party relationships.	Takes a more comprehensive approach, addressing both internal and external risks, encompassing operational, financial, legal, regulatory, and strategic risks.
Purpose	Aims to assess and mitigate risks specifically related to third-party relationships to protect the organization from external vulnerabilities.	Has a broader purpose, aiming to align an organization’s strategies, policies, and controls to manage all aspects of risk, compliance, and governance, including internal and external risks.
Stakeholders	Typically involves procurement, vendor management, IT security, and compliance teams. It directly affects those responsible for vendor selection, monitoring, and risk mitigation.	Relevant to a wider range of stakeholders, including executive management, compliance teams, legal departments, IT, finance, and auditing, affecting the entire organization’s risk and compliance strategies.
Compliance	Focuses on ensuring that third parties comply with contractual agreements, data protection regulations, and industry-specific standards.	Covers a broader spectrum of compliance areas, including industry regulations, internal policies, and legal requirements, often involving compliance monitoring, reporting, and audits across the organization.
Technology and Tools	Utilizes tools tailored to manage third-party risks, such as vendor risk assessment software, due diligence platforms, and vendor risk scoring systems.	Utilizes a broader range of GRC tools, including risk management software, compliance management platforms, audit and control systems, and policy management software, addressing a wider range of risk and compliance needs.
Integration	TPRM tools may integrate with broader GRC systems to provide a more comprehensive view of risks but primarily focus on third-party risk assessment.	Integrates various components, including risk management, compliance, audit, and policy management, to offer a unified view of an organization’s risk and compliance landscape, covering internal and external risks.

How To Choose GRC or TPRM Solutions

In the fast-paced realm of cybersecurity, organizations often find themselves at a crossroads, debating the choice between an integrated Governance, Risk, and Compliance (GRC) solution or a dedicated Third-Party Risk Management (TPRM) tool. This ongoing debate hinges on finding the right balance – the perfect blend of comprehensive risk management and the agility to tackle real-time cybersecurity challenges.

One common issue is the perceived complexity and heaviness of integrated GRC platforms when applied to TPRM. The benefits of a GRC tool is obvious. But these comprehensive GRC systems, while incredibly powerful in managing a broad spectrum of organizational functions and risks, might sometimes feel like maneuvering a massive aircraft when dealing with the specific nuances of third-party risk management. Furthermore, the focus on real-time cybersecurity challenges, where threats can evolve in minutes, has been an Achilles’ heel for some traditional GRC platforms.

Centraleyes: Internal and External Risk Management Reimagined

Meet Centraleyes, the platform that redefines the cybersecurity and risk management landscape. Unlike one-size-fits-all GRC platforms or single-focused TPRM tools, Centraleyes is engineered with a singular focus: cyber risk and compliance management. 

In a world where agility is so essential, Centraleyes is your go-to solution for managing the security complexities of the digital age.

Centraleyes offers organizations a strategic advantage by seamlessly integrating the strengths of GRC and TPRM.

Centraleyes Features Include:

Streamlined Risk Assessments

Internal and external risk assessments provide a comprehensive and accurate understanding of the risk landscape associated with internal controls, as well as with third-party and supply-chain relationships.

Due Diligence

An advanced TPRM platform should provide access to industry data, due diligence information, and assessment products. This empowers organizations to make informed decisions based on reliable external sources.

Reporting Capabilities

Manual reporting processes pose significant challenges in TPRM, hindering data analysis, reporting accuracy, and scalability. To improve data quality and reporting efficiency, organizations should ensure they have good reporting and documenting tools.

Risk Visibility

Automation provides real-time insights into the risk landscape associated with third-party vendors, enabling organizations to identify and prioritize risks more effectively.

Enhanced Agility

With Centraleyes, organizations can respond swiftly to ever-changing cyber threats, ensuring they stay one step ahead of potential risks.

Comprehensive Risk Management

Centraleyes provides a centralized platform for addressing internal and external risks, offering a streamlined approach to risk management.

Increased Efficiency

By leveraging Centraleyes’ power, organizations can efficiently manage their cybersecurity and risk landscape, saving time and valuable resources.

Internal and External Risk Management With Centraleyes

Centraleyes combines the strengths of both GRC and TPRM, offering organizations the best of both worlds.

Ready to explore the future of cyber risk management? Dive into Centraleyes and discover how it can transform your organization’s approach to cybersecurity and risk management. Request a demo or get in touch with our team for more information. Centraleyes is the fusion of GRC and TPRM that your organization needs to thrive in the dynamic world of cybersecurity.