Around the world, many businesses like have benefited from third-party vendors or service providers. Third-party vendors give room for organisations — big or small, to focus on its highest value activities while others, less valuable, are outsourced.
Sometimes, outsourcing carries security risks that can damage the business. As organization grows, it becomes more vulnerable. An investment in mindful third-party relationships is mandatory to vendor risk assessment to mitigate risks and ensure business continuity. Third-party risk management framework to manage cyber risk before choosing a vendor, which includes business channels, marketing partners, and anything else that has access to the company’s network. Some outsourced vendors may operate with less robust cyber protection that might leave the company at risk of a cyber breach.
Third-Party Risk Management (TPRM) involves the process of evaluating and regulating risks of outsourcing to third-party vendors or service providers, including giving access to the organization’s data, intellectual property, finances, and other sensitive information.
Diligence determines the overall eligibility of a third-party. TPRM is the process of gathering relevant and reliable information about a third-party. This reviewing, observing, and managing communication is a continuous process over the entire vendor’s work-cycle, not a one off. With the rise of cyber crime, it is important to ensure that not only the company’s own networks but also those of outsourced partners are secure.
Best practices to improve Third party risk management framework
In order to improve the Third party risk management framework, there should be compilation of inventory of all third parties that the organization has a relationship with. Identifying, categorising and underlining the risks are critical activities to enhance the process of TPRM. Establishing a decision-making team and a diligence testing pattern plays an integral role in mitigating risks and also in influencing governance and framework decisions. With setting up of the benchmark to identify three line of defence owners, third-party oversight and an internal audit team, helps in reviewing the crucial activities in third-party risk management framework. By implementing a contingency plans for data breach events, or for when a third-party proves low quality improves the approach towards third party management risk.
A foolproof third-party risk management framework can safeguard a company’s clients, employees, and operations. The level of risk that companies face today is staggering. Hence, proactively finding third-party risk management is a key.
Over the years, MBG Corporate Services has understood the assignment. Today, MBG stands as a trustworthy partner for their clients and is ranked as an experienced partner with the deep third-party risk management expertise that is required to manage critical information systems and data of the clients and vendors that are involved with.
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Madan Mohan is director — technology advisory, MBG Corporate Services
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