Bridging the Gap in Third-Party Breaches
Dispatching business functions to service providers has created efficiency and driven down costs, but outsourcing can create many in-house risks. These risks have recently made headlines with the financial and reputational ripple effect still being felt. To avoid such adverse outcomes, companies must take the necessary steps to fortify and supplement their vendor risk management program.
Establishing a Vendor Risk Program: Key Considerations
What goes into an effective vendor risk program? Simply put — Everything. That may not be the most descriptive answer, but the reality is that the umbrella of enterprise risk management encompasses compliance, audit, legal, procurement, etc. and all associated departments.
At its foundation, a vendor risk management program should be built around several key components, including:
- Creating a register of all vendors (and associated contacts at that company)
- Assessing vendor risk (based on data access or severity of potential business disruption)
- Classifying/Grouping vendors by risk
- Populating vendors into precomposed risk management plans and associated tasks based on risk level
Taking a risk-based approach will not only simplify the process, but also create organizational awareness of prioritized areas for attention. Once this is established, processes to continuously monitor and track vendors must be established. This ensures not only that vendors are kept up to date on your requirements, but also minimizes the risk of vendors exposing you to possible vulnerabilities.
Executing the Plan: Who owns all this work?
One major challenge in launching and managing a project like this is that no single department wants to own it. And who can blame them?
Historically, this would require loads of resources, time and coordination across multiple groups. With no central data repository or environment for sharing, necessary information must be pried from siloed departments and strung together in a web of spreadsheets or documents. Quite the nightmare for anyone involved. However, new technologies are available that alleviate much of this headache by breaking down silos and integrating tasks and data into one location.
With companies becoming overnight celebrities due to third-party breaches, widespread interest has ensued in the search for a solution. The resounding impact of these mishaps has been echoed in the realm of Governance, Risk Management and Compliance (GRC) solutions.
Next-generation GRC solutions change the third-party risk management game. No longer is this a resource-heavy undertaking of babysitting email strings and raking together scattered, supporting data documents. Information and documents are gathered in a central repository, regardless of if governance duties are siloed by departments.
Whether a company utilizes two or 2,000 vendors, a robust GRC solution manages the entire vendor risk management lifecycle: creating a vendor register, assessing vendors’ risk, grouping based on risk ranking, and setting appropriate workflow processes. Reducing manual tasks such as assessment creation, testing/surveying, remediation, and scheduled reviews means more time is spent on the priorities and less on the mundane.
The primary function of a third-party risk management program is to keep the company safe and secure from outside threats. The key components of such programs are crucial to the success and, ultimately, the avoidance of such headlines. GRC solutions not only supplement an organization’s efforts, but also provide the oversight and clarity needed to fortify themselves against this world of interconnectivity.
Learn a few key insights from the workshop Third Party Management by Design.
Read about third parties being both a necessity and a burden.
Read about some of the highlights from our expert panel discussion.