Why is Third Party Risk Management Important?

Third Party Risk Management (TPRM) addresses the foundational aspects of cybersecurity, ensuring business continuity and the maintenance of regulatory compliance. TPRM helps organizations identify, understand and mitigate risks introduced by third-party vendors. 

‍Key Elements of Third Party Risk Management

‍

• Cybersecurity Risk: Mitigating risks from cyber attacks, data breaches, and security incidents. This involves due diligence during vendor onboarding and throughout their lifecycle.
• Operational Risk: Managing disruptions in business operations. This often involves service level agreements (SLAs) and implementing backup vendors for critical operations.
• Legal, Regulatory, and Compliance Risk: Ensuring third party vendors comply with legislation and regulations, significantly impacting industries with stringent compliance requirements.
• Reputational Risk: Managing public opinion influenced by third parties. This includes handling negative customer interactions and preventing third-party data breaches.
• Financial Risk: Mitigating financial impacts due to third-party actions, like supply chain issues affecting product sales.
• Strategic Risk: Ensuring third-party actions align with business objectives and do not hinder achieving these goals.