Wednesday, June 19 2024

What is Third-Party Risk Management?

Third-Party Risk Management (TPRM) software assists organizations in managing risks associated with their relationships with suppliers, vendors and service providers. The products offer a range of features to automate and streamline various aspects of third-party risk management. They typically include tools for risk assessment, due diligence, contract management and ongoing monitoring.

How does it work?

TPRM offerings operate through a combination of tools and features that streamline various aspects of third-party risk management.

The tools include providing questionnaires or surveys to gather information about third-party vendors’ security practices or financial stability. They also have due diligence features like background checks, review past performance and certification verification.

TPRM products assist in contract management by storing contract documents, tracking important dates and ensuring compliance with obligations, such as regulatory requirements, service level agreements and data protection standards.

Additionally, the solutions offer ongoing monitoring capabilities, alerting organizations to any updates or changes that could impact risk status, such as expired certifications or sudden financial shifts. They also provide alerts and notifications to notify risk management teams of potential issues. TPRM solutions offer reporting and analytics features to help organizations understand their overall third-party risk exposure and track performance over time.

Why are they useful?

TPRM products offer multiple benefits to businesses navigating complex external partnerships.

The offerings can provide a streamlined approach to risk assessment and management, combining data and processes into one platform. This saves time and resources, allowing businesses to focus on strategic priorities rather than administrative tasks.

Ensuring risk evaluations and identifying potential issues early on are also among TPRM products’ many abilities. For instance, a manufacturing company using TPRM tools can assess the reliability of its suppliers, reducing the risk of production delays or quality issues.

The products also play a crucial role in maintaining regulatory compliance. By automating compliance checks and documentation processes, the tools help businesses adhere to industry regulations and standards. Successful compliance not only reduces the risk of fines and legal complications but also preserves an organization’s reputation and credibility.

For example, a healthcare provider utilizing TPRM solutions can ensure that its third-party software vendors comply with data protection regulations, safeguarding patient confidentiality and trust.

By facilitating the sharing of risk assessment results and promoting open communication, the offerings can also foster collaboration and transparency among stakeholders. TPRM offerings help businesses to make informed decisions by providing comprehensive insights into potential risks, such as an assessment of its investment partners’ financial stability.

What companies provide TPRM services? How do they differ from each other?

Companies offering TPRM services distinguish themselves through features like AI-driven risk assessment, industry-specific compliance frameworks and collaborative risk management platforms. The innovations enable proactive risk mitigation and tailored solutions for diverse regulatory environments. The following summaries are based on general customer sentiment across multiple review platforms.

Risk Profiler

Risk Profiler by Risk Profiler is praised for its user-friendly interface with customizable risk assessment templates. However, customers report it has limited integration options with other software systems.

Pros:

●  User-friendly interface

●  Customizable risk assessment templates

●  Comprehensive risk reporting and audit trail

●  Provides valuable insights into changes in security postures over time

●  Affordable

Cons:

●  Limited integration options

●  Lack of advanced analytics features

●  Occasional system glitches

●  Difficulty in managing large volumes of data within the platform

●  Some users report issues with customer support response times.

Process Unity

Process Unity Vendor Risk Management by Process Unity is well-regarded for its strong workflow automation for vendor onboarding and risk assessment, yet many customers report it is difficult to set up because of its complexity.

Pros:

●  Automated workflow capabilities

●  Comprehensive vendor risk assessment tools

●  Good integration with diverse business systems

●  Detailed reporting and analytics

●  Scalable for large enterprises

Cons:

●  Limited customization options

●  Expensive

●  Communication limitations within the platform may hinder business collaborations.

●  Implementation may experience delays during busy periods.

●  Lack of user tutorials may hinder onboarding.

OneTrust

OneTrust Third-Party Risk Management by OneTrust is praised for its extensive library of compliance templates for various regulatory standards, but customers express it suffers from platform stability issues leading to occasional downtime.

Pros:

●  The tool encourages discussions on data, risk, and compliance as well as provides input from experts on the topic.

●  Ability to register third parties and send questionnaires through the platform

●  Regular updates and improvements

●  Comprehensive compliance templates

Cons:

●  Customer support is limited to emails, causing delays.

●  Lack of pre-made integrations and workflows means more customization is required.

●  Occasional difficulties with user permissions management

●  Learning curve for advanced features

●  Expensive

BitSight

BitSight Third-Party Risk Management by BitSight is liked for its constant real-time risk assessment of third-party vendors. However, people say it has limited customization options for the risk assessment criteria.

Pros:

●  Continuous monitoring capabilities

●  Easy-to-understand risk ratings

●  Integration with other security tools

●  Actionable insights for risk mitigation

●  Enterprise-wide accessibility allows all employees to perform risk management activities.

Cons:

●  Occasional inaccuracies in risk ratings

●  Reporting functionality could be improved.

●  Expensive

●  No built-in alerts for data feed failures

●  No bullet graph in progress reports

RSA

RSA Archer by RSA is well-regarded to have comprehensive risk assessment capabilities with customizable workflows and reporting. However, customers also state the product is difficult to operate for new users, requiring extensive training.

Pros:

●  Robust risk assessment features

●  Customizable workflows

●  Detailed reporting options

●  Integration with other RSA products

●  Strong customer support

Cons:

●  Requires dedicated IT resources for maintenance

●  Requires a significant amount of computing resources to operate effectively, such as the CPU (central processing unit) short-term usage and memory storage (often referred to as RAM)

●  Difficult to learn and complex to set up

●  Expensive licensing fees

●  Limited out-of-the-box templates

The Future of TPRM

According to a May 2024 Market Research Future report on third-party risk management, the market is projected to reach 24.25 billion USD by 2030. The growth is driven by an increasing awareness among companies of how global events such as geopolitical instability and changing regulations affect vendors and supply chains. If there is a large enough impact on supply chains, a company’s reputation and profits suffer.

TPRM solutions are also becoming popular due to increases in data security breaches involving Internet of Things (IoT) devices. IoT devices are often used in supply chains to monitor equipment. However, they can be susceptible to hacking, leaving the organizations who use them at risk.

Industry trends towards centralized operations and standardized practices, reinforced by new laws such as France’s SAPIN 2 and the UFLPA in the USA, have also driven the emphasis on TPRM, according to Moody’s analytics report “The rising tide of third-party risk management.” As a result, many companies have established in-house TPRM departments to bolster resilience and ensure adherence to regulations.

Explore CISOstack for in-depth insights, practical tips, and expert interviews on the latest cyber threats. Subscribe for regular updates to keep your company ahead in digital defense. Stay informed and secure with us.

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