Prasad Sabbineni, Co-Chief Executive Officer at MetricStream, emphasizes the importance of third-party risk management in today’s business landscape. With geopolitical tensions, supply chain disruptions, and strict regulations, organizations worldwide need to prioritize managing risks associated with third parties. These risks can range from high-severity events like the Covid-19 pandemic to low-severity events like phishing attacks, highlighting the necessity of proactive and continuous risk management strategies.
According to Deloitte’s 2023 survey, 63% of respondents are focusing on revisiting and refreshing their third-party risk management methodologies. Organizations are encouraged to consider key factors while developing effective risk strategies, including making third-party risk management a collective responsibility across all levels of the organization. Educating employees on third-party risks and establishing clear roles and responsibilities are crucial steps in managing these risks effectively.
Integrating third-party risk and compliance management into governance, risk, and compliance programs can provide organizations with a comprehensive understanding of their overall risk posture. By aligning third-party risk strategies with organizational goals and integrating risk management approaches across business units, organizations can gain accurate insights into risk exposure and make informed decisions. Creating a common risk language and taxonomy can facilitate data aggregation and analysis for better risk visibility and decision-making.
In today’s interconnected world, managing third-party risks in a disconnected manner is no longer effective. Organizations must understand the intersection of various risks and their impacts on assets, processes, policies, and other risks. Adopting a connected GRC approach that links enterprise risk, compliance, and audit programs can help provide actionable insights for a better response strategy. Leveraging technology like machine learning, AI, and predictive analytics can automate GRC processes and provide real-time security scanning and assessment tools for monitoring third-party risks.
Improving the peripheral view of risks requires organizations to identify emerging risks and uncover hidden trends and patterns that could pose threats if left unaddressed. Building continuous risk monitoring capabilities and empowering frontline executives with intuitive tools can help identify risks proactively and determine appropriate mitigation measures. Embracing a forward-looking risk management approach and harnessing internal and external data can enhance third-party risk intelligence across the three lines of defense.
In conclusion, organizations should prioritize a connected and continuous approach to third-party risk management to drive business resilience. Embracing technology and automation can help implement effective oversight of third-party risks with no blind spots. A robust third-party risk management program encompassing clear processes, policies, due diligence, contracts, risk assessment, monitoring, and mitigation is essential for business resilience in today’s dynamic business environment.
