The business world has evolved significantly in recent years and vastly differs from what it used to be. After the pandemic period was over, many organizations began to rely on digital tools for vendor risk management.The Survey shows that nearly 6 out of 10 businesses work with over 500 third-party businesses for support functions. That is too many business partners, and the number is just going up.

More partners mean more vulnerability. If you consider risks like data leaks, privacy concerns, and cyber-attacks, these are not just buzzwords but real challenges that could result from ineffective third-party risk management. In 2022 alone, whenever a company in the U.S. faced a data breach, they had to shell out an average of $9.44M.

And here’s the real twist. Not all breaches come from the internal operational vulnerabilities of an organization. A good chunk, about 19%, happened because of a third party they were working with. Instances where the third-party service providers did not have a robust cyber risk management system in place.

Apart from financial losses, there are other risks as well, such as reputational, strategic, and functional risks. The only solution is to ensure effective third-party risk management tools are in place that keep the hackers out and ensure that an entity can keep running smoothly. This has become necessary for businesses to keep an excellent reputation in the market and prevent any financial loss that may arise from third parties.

Financial companies must step up their risk management game, be on the lookout for such risks, and manage them before they become a challenge. The traditional risk management methods are not working out anymore; leveraging advanced technology is the best way to stay ahead in the industry.

6 Innovative Opportunities for Effective Third-Party Risk Management Solution

3rd party risk management is far more challenging in the modern, volatile business landscape. With so many connections and partners, it is essential to have reliable and innovative solutions. Here are six comprehensive strategies to ensure smooth management of third-party risks:

Innovation Opportunities for Effective Third-Party Risk Management Solution

1. Stay Alert 24/7 with Continuous Monitoring

In the digital age, risks do not sleep; neither should monitoring procedures. Continuous monitoring means keeping an eye on third-party activities around the clock. This may not be possible manually but can be achieved through advanced tools that alert you when something seems off. It is an effective third-party risk management approach, ensuring that potential issues are identified and addressed immediately, reducing the chance of them increasing into significant problems.

2. Improve Detection with Risk Intelligence

Knowledge is power. Companies can make informed decisions by gathering detailed intelligence on potential risks. This involves collecting data from various internal and external sources, analyzing patterns, and predicting future threats. It is like having a detective on your team, always piecing information together to protect the company and help improve the overall third-party risk management framework.

3. Get Everything in One View

Clarity is crucial for effective third-party risk management. With hundreds of third parties and potential risks to manage, risk managers can easily get overwhelmed. That is where unified dashboards can make a difference. By consolidating all risk-related information into one place, companies can get a bird’s-eye view of their risk landscape. This centralized approach for monitoring risk ensures that everything runs smoothly, and timely risk reduction actions can be taken.

4. Peek Beyond the Curtain with Supply Chain Transparency

Sometimes, risks may not be apparent and hidden in unexpected processes. For instance, it may not be your direct service contractor exposed to the risk, but their subcontractor. By ensuring transparency throughout the supply chain, companies can identify and address risks that might go unnoticed. This strategy of effective third-party risk management involves understanding who your third parties work with, assessing their risk profiles, and ensuring they adhere to the standards you assume from your direct collaborators.

5. Invest in Tomorrow’s Heroes

As the business landscape evolves, so do the skills to manage risks. Training the next generation of risk managers who will handle your third-party risk management framework is essential. These individuals will be at the forefront of identifying, analyzing, and mitigating risks in the future. By prioritizing their training and development, companies ensure they can continue to manage future challenges.

6. Double Down on Cyber Security

IT Security must be addressed in an era where data breaches are all too common. This is especially common when third-party service providers are given access to your networks and systems. Effective third-party risk management security solutions offer significant control over who gets access and what they can do.

Conclusion

In our rapidly evolving business landscape, third-party risk management is not just a need but a strategic advantage. Businesses must look deeper into the importance of understanding third-party risks, from cyber threats to operational disruptions. We have highlighted six innovative strategies to strengthen your risk management approach and investing in next-gen TPRM technology can support your business objectives.

Predict360 TPRM is an effective third-party risk management solution in this regard. This app is designed for the modern enterprise, enabling organizations to track, manage, and report vendor risks effectively. Predict360 Third-Party Risk Management software is offered as a standalone product as well as a module of the Predict360 ERM Suite.

Its main features include a comprehensive view of third-party risks, automated workflows, advanced reporting, and AI-powered insights. The app is not just about identifying third-party risks; it is about understanding them, managing them, and turning them into opportunities. Here are some of its unique aspects:

  • Centralized Data Repository
  • Complete Vendor Lifecycle Management
  • Review or Assess Vendor Certificates and Documents
  • Automated Workflows to Collect Information from Employees and Vendors
  • Advanced Business Intelligence with the Embedded Tableau Reporting Engine

In the growing world of third-party relationships and their challenges, apps like Predict360 TPRM are essential partners in the risk management journey. As you set up or reevaluate your effective third-party risk management strategy, consider how Predict360 can improve your approach to ensure your business remains vigilant and compliant.