Third Party Risk Management Software: The Essential Elements and Features

The need for TPRM Solutions Today

In today’s hybrid ecosystem of cloud computing, remote employment, and global supply chain ecosystems, organizations are increasingly using the services of third parties to increase productivity, efficiency, and delivery of goods and services – yet most organizations don’t address the interrelated rise in malicious threats and vendor risks. Third-party vendors that handle sensitive corporate data often lack critical security controls.

As the use of third-party vendors increases, so does the need to manage the inherent risks that emerge with these partnerships.

A study by the Ponemon Institute concluded that 61% of US respondents reported that their organizations experienced a third-party data breach. That’s up from 56% in 2017, and 49% in 2016. The vast majority of participants responded that they had insufficient resources to manage third-party risk.

Third Party Risk Management Software: The Essential Elements and Features

TPRM is a Catalyst for Business Growth

Risk is naturally viewed as something to be minimized or avoided, with businesses spending significant effort on risk mitigation. However, the truth is that risk is also a value creator and, when properly planned, can accelerate business performance. In the case of third-party relationships, as an enterprise grows, the ability to manage third-party relationships becomes even more critical to success. Reluctance to expand to a third-party ecosystem, for fear of the risks imposed by that expansion, will likely put the organization in a backseat to its competitors that seize the benefits of a third-party vendor, confident in their ability to assess and mitigate inherent risks. 

Today’s leading organizations value their third-party relationships, leverage the capabilities of an effective TPRM, and understand that effective third-party relationships lead to resilient, successful businesses. 

TPRM Challenges 

Business leaders are well aware of the necessity of third-party risk management solutions, but often lack the resources or knowledge to address TPRM holistically, and instead, take a fragmented approach. Chasing vendors to fill out security questionnaires, completing annual assessments, and continuous monitoring all create a siloed and stressful approach to TPRM on risk management teams.

Enterprises are under ever-increasing requirements to nurture secure vendor relationships, while vendors are facing increasing demands to comply with risk assessments and communicate their security postures. Both ends struggle with time-consuming and repetitive tasks, making risk assessments, however necessary, full of pain points.

Third-party risk management presents tough challenges, making it difficult for companies to fully integrate an effective TPRM. New technologies have emerged to address these challenges and automate a streamlined vendor risk management process. We’ll discuss them in more detail in the next section. 

TPRM Challenges That Your Organization May Face:

  • Compliance Complications 

Third parties can add a layer of complexity to compliance with regulatory requirements. They’ll need to install or implement controls to fulfill your security requirements, as is the case with HIPAA or GDPR.

  • Difficult to Automate 

It is virtually impossible to monitor third parties without an integrated solution. Using manual monitoring techniques equals endless hours spent on repetitive tasks.

  • Communicating Security Policies 

When working with third parties, it is imperative to explain the security policies your company implements, and how they fit into the security parameters set by your risk management policy. When working with tens or hundreds of vendors, this can be an exhausting endeavor.

  • More Complex Networks 

Having an infrastructure that is woven with a large number of third-party networks, not to mention fourth-party vendors, (your vendor’s vendors)  could introduce unique security management challenges as it expands your attack surface. 

  • Scaling Challenges 

If TPRM is already a struggle, keeping up with your vendor due diligence will only become more congested if a scalable and streamlined third-party risk management platform isn’t adopted. While questionnaires and fill-out- forms have their place in a vendor risk management program, it is nearly impossible to scale as your company grows using a manual approach. 

TPRM is Not a Compliance Chore

When companies think about TPRM as a checkbox requirement for compliance certification, they don’t address the root causes underlying the complex risk of third-party vendors. By viewing TPRM as a set of minimum requirements, it’s easy to neglect potential risks that could become big security matters for your organization. This is especially relevant when each vendor is viewed as its own project, without standardizing processes across an entire organization.

A holistic approach that integrates TPRM with your wider risk management can have huge benefits. Instead of just conducting a one-time vendor audit, you’ll be proactively assessing third-party risks and continuously improving operations, efficiencies, and processes to enhance the security of every aspect of your supplier network by embedding your assessment program as part of your larger compliance landscape. Information may be shared across the company, ensuring that risks are identified and managed continuously. An automated vendor risk management software solution solves each of the challenges listed above and supplies many more additional benefits as well.

Start Getting Value With
Centraleyes for Free

See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days

What Are TPRM Software Solutions?

Since TPRM implementation is so challenging, many businesses leverage TPRM service providers and software solutions to help them manage third-party risk holistically. These platforms should include a few key features:

  • Contract Life Cycle Management: In a vendor risk management program, contracts are not “one and done”.. Businesses must continually monitor and assess contracts in light of performance and the current threat landscape and incorporate the allowance of modifications into the contract.
  • Vendor Inventory and Database: Your third-party risk management system isn’t only used to manage risk factors. An integrated platform should also store and display your organization’s complete vendor inventory (and the related profiles for each of those vendors). A vendor profile should contain more than just a name. Here are some key components of a complete vendor profile:
    • The vendor’s legal business name, primary address, and contacts
    • Important documentation such as SOC reports or insurance certificates
    • Contracts you have signed with the vendor, and whether the contract is active or obsolete
    • A list of important information related to the vendor, including red flags uncovered during due diligence or ongoing monitoring
  • Automation of Vendor Onboarding: There should be a streamlined process for onboarding potential vendors (or existing vendors when a change in the contract occurs). Use risk scoring to calculate an inherent risk level, helping you determine what level of risk-based due diligence to perform on your vendors.
  • Manage Risk Profiles: A good third-party risk assessment software solution or platform should give their customers the ability to build, create, and review profiles on an individual basis, as well as provide a centralized view of all vendors.
  • Continuous Monitoring: Initial due diligence is not enough in a TPRM program, and continuous monitoring is perhaps the most critical aspect of an automated TPRM. Your system should be able to facilitate a continuous approach to managing your vendor relationships throughout their entire lifecycle. This could mean workflows around the onboarding, data collection, and assessment of vendor performance reviews (performed by your employees on some pre-determined frequency based on the vendor’s risk level). It could also mean integrating with other integrated third-party intelligence tools like vulnerability scanning to incorporate real-time monitoring of your vendor partnerships.
  • System Integration: Along with being able to communicate with third-party assessment tools as mentioned above, your system should also be able to seamlessly integrate with other operational tools used by your organization, and pull in (or send) relevant information to/from each. You might want to connect your system to your organization’s GRC (governance, risk, and compliance) system to push vendor-related issues into your organization’s risk register.
  • Reporting:  Your system should make it easy to report on vendor management activities, allowing for the easy collection of data used in reporting to senior management, committees, or your board. It should also allow for ad hoc reporting in case the staff needs to obtain information specific to their needs (for example, a list of active vendors in their department). There should also be role-based dashboards that make it easy for each user to see only the most relevant information.
  • Automation: While it does not seem very intuitive, many aspects of TPRM can be automated in a Software-as-a-Service (SaaS) system. Evaluations, event triggers, and contract evaluations—each can map to metrics within a cloud system to streamline TPRM.

The Benefits of TPRM Software

A strong TPRM program helps organizations gain greater insight into the risks and an understanding of the responsibility they have for protecting their assets across their business ecosystem. Other valuable benefits may include

  • Reduced occurrence and cost of data breaches
  • Fewer operational failures
  • Enhanced compliance with regulatory mandates
  • Improved security of remote work programs

The Centraleyes Difference

Third-party management and TPRM frameworks can help enterprises remain responsive, flexible, and scalable in the modern business economy.

Finding the right third-party risk management platform can appear daunting, but it doesn’t need to be. The key factors explained in this article should help you find a software solution that is tailor-fit for your organization.

At Centraleyes, our goal is to help you gain clear insight into third-party risks to support your business risk and compliance strategy. Our risk management platform provides an all-in-one solution that streamlines automated risk management ensuring that your vendor ecosystem is secure.

Start Getting Value With
Centraleyes for Free

See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days

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