Global third-party vendors have become a key source of strategic advantage and business value for many companies. Outsourcing, however, is not without its drawbacks. As companies’ reliance on third parties grows, so does the number of headline stories about regulatory action and reputational damage caused by third-party breaches or failures.
Those in charge of enterprises must reevaluate their approach to identifying, assessing, and managing third-party risk.
Due to the rising regulatory focus and complexity of connections with foreign and local third parties, financial services businesses based in or operating in the United States must place a heavy emphasis on third-party risk management. Outside of the United States, countries like Australia, under APRA’s Prudential Standards, have a major focus on third and fourth-party vendor management in financial services. Third-party suppliers can bring significant strategic benefits to your company, and the most successful companies make extensive use of contractors, focusing on what they do best and outsourcing the rest. However, if these third-party partnerships are not properly managed, they might pose a cyber security risk.
The ability to manage third-party connections becomes increasingly important as organizations develop in size and complexity. Organizations that are afraid of the hazards that expanding their third-party ecosystem can bring will be disrupted by those that can confidently detect and manage risk.
Whether or not it’s a statutory obligation, every business should limit digital risks by establishing a third-party, and even fourth-party, management strategy in their security risk management processes. This can be achieved through Third-Party Risk Management Software.
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What is Third-Party Risk Management (TPRM) software?
The practice of identifying and controlling risks associated with outsourcing to third-party vendors or service providers is known as third-party risk management (TPRM). This could include intellectual property, data, operations, finances, consumer information, or other sensitive information.
This means that due diligence is essential to evaluate a third-general party’s fitness for a certain task, as well as whether or not they can keep the information secure.
Due diligence is the process of investigating a third party to see if it is suitable for a particular assignment. Over the course of a vendor’s lifespan, due diligence includes assessment, monitoring, and management communication.
Any third-party risk management software should aim to lower the chances of data breaches, costly operational failures, and vendor insolvency.
Highlights of Third-Party Risk Management software
- Serve as an Inventory and Profiles of Vendors
Your third-party risk management system should do more than just allow risk-based operations; it should also hold your organization’s whole vendor inventory (and profiles for each of those vendors).
- Risk-Based Classification Automation
There should be a workflow-based procedure for analyzing new vendors (or existing suppliers when scope changes) and scoring logic to compute an inherent risk level, allowing you to select what amount of risk-based due diligence to undertake on your vendors. Should certain internal stakeholders need to examine risk assessments, your system should provide for approvals.
- Vendor Engagement
Your vendors should be able to easily provide you with information and documentation. It should also be simple to figure out what to ask for. Your vendor risk software should be capable of facilitating risk-based due diligence assessments based on the vendor’s inherent risk level, and it should include logic for adequate scoping. If your vendor will not have access to any of your organization’s non-public information (NPI), for example, there is no reason to send them due diligence questions about how they store, access, or process your data.
- Continuous Monitoring
In today’s world, initial, point-in-time due diligence isn’t enough. Your supplier risk management software should be able to support your company’s ongoing monitoring approach to vendor relationship management. This could include routines for the launch, collection, and review of vendor performance reviews (which are conducted by your staff on a regular basis depending on the risk profile of the vendor).
- System Integration
In addition to being able to interface with third-party intelligence products, your system should be able to smoothly integrate with other operational tools used by your company and bring in (or transmit) necessary data to and from each. To draw in spend data, you might want to interface your third-party risk management system with your AP system.
What Are The Key Features Offered By A Third-Party Risk Management Software?
To qualify as a good Third-Party Risk Management Software ( TPRS), one software should include the following salient features:
- Provide a 360-degree view of suppliers that can be shared internally and internationally by incorporating standard protocols and templates for assessing and evaluating supplier risk.
- Ensure that internal policies and procedures for supplier risk are followed.
- Give self-service portals for suppliers to provide information and documents, as well as processes and templates for supplier risk control and supervision.
- Include typical risk monitoring and risk exposure reports.
- Keep an eye on vendor performance and any changes in supplier risk.
3 Continuous Advantages Of Using A Third-Party Risk Management Software
- Reduce your exposure to third-party risk.
Continuous monitoring provides you with real-time information about the security posture of your third-party vendors. Instead of a calendar date, actions such as a change in security rating or an appropriate regulatory change can prompt the requirement for an assessment. This ensures that the assessment is prompted by the need to conduct one, thereby preventing unacceptable risk from entering the third-party environment merely because it isn’t time for reassessment yet.
- Improve Resource Allocation Efficiency
Risk evaluations conducted by third parties provide insight into potential problems. The assessment can be tailored to focus on concerns or improvements that are important to you. This can save you a lot of time and money, especially if you operate with a lot of third parties (hundreds or thousands).
- Reduce the Risk of Breach
Cybersecurity teams may swiftly acquire reliable, current information during an assessment by analyzing for potential vulnerabilities and reporting them within the platform. Furthermore, timely analysis allows the team to set thresholds and customize alerts based on the organization’s risk tolerance and major issues, such as a newly exposed database or a security breach, so you can respond promptly to avoid costs and damage to your reputation.
3 best Third-Party Risk Management Software
Resilinc is a supplier risk management software that enables you to obtain supplier performance data at a lower cost and with less inventory. EventWatch, RiskShield, Multi-Tier Mapping, and Capability Assessment are some of the Resilinc offerings.
Key Features Of Resilinc
Resilinc’s features are divided down into their component parts:
Your supply chain should be monitored 24 hours a day, seven days a week. Identify events that may have an influence on your supply chain. Predict how an event will influence your suppliers and sites, then ensure resource allocation to reclaim control.
Create dashboards to see your multi-tier supply chain, rate your suppliers to identify risk objectively, and manage risk with automated procedures.
- Mapping of a Multi-Tier Supply Chain
Visualize your supply chain, identify potential failure points and weaknesses, assess risk to improve supplier performance, and track supplier operations from a central location.
Resilinc’s monthly cost starts at $1400.00 per feature. There is no free version available. A free trial is available from Resilinc.
- The option to export data is a useful feature. When conducting what-if scenarios, it’s simple to do.
- It offers good value for money and has a dynamic customer support
- It can be slow at times, and one can feel that the technology is out of date.
- It has limited features compared to its other competitors
Third-party risk management is made easier with Prevalent. The software and its services help businesses remove security and compliance risks associated with interacting with vendors, suppliers, and other third parties. A flexible, hybrid approach to TPRM provides a quick return on investment for our customers.
Key Features Of Prevalent
- Management of Audits
- Management of the Audit Trail Compliance
- Actions that are both corrective and preventative (CAPA)
- Management of Exceptions
- Management of Internal Controls
- Risk Management in Information Technology
- Management of Legal Risks
- Management of Operational Risk
There has been no information about pricing by the vendor, one should speak to an industry expert for the same.
- The customer service is excellent.
- Makes survey creation simple
- Simple to work with
- Not very precise
- The learning curve is steep
- It takes time to get approved.
Aravo is one of the best cloud-based supplier risk management tools for the automotive, retail, manufacturing, pharmaceutical, and life sciences industries. Workflow builder, supplier portal, form builder, and reporting are all important elements.
Key Features Of Aravo
- Can handle all aspects of risk management, including planning, implementation, and evaluation.
- Duplicates are removed.
- Operational burdens are reduced
- Increase operational efficiency by increasing transparency.
- Boosted Customer Satisfaction
- Ensures ABAC Policy Compliance
It does not offer a free version. More details are not provided by the vendor
- It’s has a transparent supplier registration process with timelines and robust functionality
- It’s simple to register and unregister suppliers.
- The tool is simple to use and has a pleasing visual look
If the machine is inactive for more than a minute, it will sign off automatically, forcing you to repeat the same task.
Third-party management software is critical to a company’s security because it protects it from the dangers that come with working with a third-party vendor. If a corporation relies on a third party for essential business products or services, it may face reputational risks, financial risks, and information risks if the third party fails. A Third-party risk management program helps to mitigate all these risks and hence is the need of the hour.
We have also discussed the Top 3 Third-party risk management (TPRM) software that users can turn to in 2022. For further information, you can head to SaaSworthy