As we become a more global marketplace, with a variety of vendors who may not even be on the same continent as us, vendor risk assessment is becoming a key business practice. With a proper third party risk assessment in place, you know the potential risks of each vendor relationship, and are fully empowered to manage and mitigate those risks. You can even weed out potentially dangerous partnerships before they become a sunk cost.
Third-Party Risk Assessment: An Introduction
No matter how secure your own organization is, an exploitable weakness or malignant entity in your third-party vendors can be exploited. Third-party risk management, or TPRM, is an ongoing process you will run to make sure you stay safe, compliant with new regulations, and running smoothly.
The audit process starts with a risk assessment. This should accurately gauge how much data they need access to, and how you can put policies in place to manage that access safely.
Third-Party Risk Assessment Best Practices
If you’re beginning your risk assessment journey, there’s no need to reinvent the wheel. In fact, you can learn a lot from the lessons other organizations have experienced. Here are some key steps to third-party risk assessment that will help you streamline and guide the process in your own organization.
Best Practices #1 - Standardization
There’s no need to change your third-party risk assessment steps for every client. In fact, that’s how errors slip through. Whatever practices you decide on should be standardized throughout your organization. Likewise, any forms, software, and other processes used. It’s fine to identify different stages for low-, medium-, and high-risk clients, but make sure the treatment within each band is standardized.
Best Practices #2 - Automation
The less your TPRM practices rely on humans, the better. TPRM software can do a lot to automate the onboarding process. Not only does this make it faster and keep standardization in place, it also makes it easier to prevent human error. Both deliberate mismanagement and simple human error can be avoided with automation. Plus, you reap the benefits of a centralized process and better security. A win-win all around.
Best Practices #3 - Accountability
Third-party risk management shouldn’t be something some vague person in the organization handles. It needs to go through someone with a stake in the relationship. Preferably the ‘Vendor Owner’, the person in your organization that actually works with the vendor. This way a realistic risk assessment can be created, based on real facts. Not only does this help accurately gauge risk, it also ensures the security protocols you put in place are practical to work with and don’t hamper day-to-day work.
Best Practices #4 - Be Proactive
Of course, there’s no point in this third-party risk assessment if you don’t do anything about the risks. If there’s additional steps, take them. Is the vendor too risky? Then offboard them. Are there loopholes to close? Close them. You have collected the real data you need to make smart decisions, but it’s useless if you don’t change anything.
Well-designed contracts are a key part of vendor risk management. Make sure you use smart legal services to help you set the working relationship off on the right foot.
Best Practices #5 - Dynamic Risk Assessments
While the initial risk assessment could be the most important, the process should never be viewed as static. Risks evolve, and so should you. Make sure you have procedures in place to regularly reassess your third party relationships, and ensure that new policies, securities, procedures, etc are enacted as they become appropriate. Don’t view this as a ‘one-and-done’ event, or you will expose your business to great risk down the line.
Make sure this schedule is enacted throughout the organization, too. If you’ve said your high-risk vendors need annual assessment, it does not good if half your departments don’t comply.
An Introduction to Certa
With Certa’s unique TPRM software, creating and implementing a secure risk assessment procedures has never been easier. Plus, you can harness the power of automation to remove human error and simplify your risk management procedures.
Easily personalize the software as needed, and create risk tiers and other strategies as you need them. You can even tailor your business rules without IT dependencies, meaning you can empower your vendor owners and avoid unnecessary steps in the onboarding and risk management procedures.
Create internal and external dashboards, collect data from all sources, and easily implement ESG solutions, effortlessly. Certa helps you take control of the third-party risk management process from start to finish. Can your business afford to be without an all-in-one TPRM solution? Let Certa help you make the best of your organization today