Third-party risk assessment, also known as vendor risk assessment or supplier risk assessment, is the process of evaluating and managing the potential risks associated with engaging with external parties, such as vendors, suppliers, contractors, or partners.
As organizations flourish in today’s fast-paced business environment, it makes good sense to turn over specialized tasks to businesses that do it best via third-party engagements. These third-party arrangements give businesses the chance to focus on achieving core strategic objectives while keeping up with non-core—but still extremely important to operations—tasks related to administration, accounting, IT services and more.
While third-party engagements offer organizations many practical benefits, they do not come without a certain degree of risk. If you are considering outsourcing one or more business tasks, it is important to develop and implement the appropriate third-party controls and monitoring strategies to ensure that third-party businesses are performing effectively, efficiently and in compliance with your respective agreements. A solid third-party risk management plan can help.
I.S. Partners, LLC. can help with your organization’s third-party risk management needs in a variety of ways, including:
A comprehensive program should define the roles and responsibilities of the personnel involved in risk management. It should review processes for vendor onboarding and the termination of services. It should define critical risk tiers and identify types of issues that would be included in each. And of course, it should review cybersecurity policies and procedures.
Third-party risk management, or vendor risk management, is the practice of assessing and then mitigating the risks associated with working with vendors (suppliers, third parties, or business partners) both before establishing a business relationship and during the business partnership.
Today, it would be difficult to find an organization that does not rely on third-party business services in some capacity. Are you considering outsourcing one or more tasks? Do you understand the risks that a third-party business might introduce to your organization?
Take the manufacturing industry, for example. Manufacturers who have experienced some sort of harm due to the action or inaction of a third-party business associate, are more likely to suffer data breaches and poor service quality for the engaging company. Third-party risk management is the foundation for vital relationships and should be a part of every company’s internal control framework. Not doing so includes financial expenses, reputational damage, legal problems and liability, regulatory non-compliance, and operational risks, like disruptions, delays, and downtime.
Outsourcing a business function or task to a third-party is largely incredibly useful to the growth and success of an organization. However, you can’t outsource the necessary responsibility from third parties that will allow your business to run smoothly. If your third-party associate fails to perform a critical task or allows for a breach of confidential data, serious negative consequences may impact your organization.
Additionally, in heavily regulated industries—banking, payment card, healthcare, mortgage and auto lending, as a few examples—third-party risk management is often required, or at least strongly encouraged. Third-party risk management is an important part of any recognized security framework, such as the National Institute of Standards and Technology (NIST), International Organization for Standardization (ISO) and Payment Card Industry (PCI). Third-party risk management promises to reasonably ensure a third-party organization’s duty of accountability and to greatly increase your peace of mind.
A vendor risk assessment can be conducted by an organization’s internal risk assessment team or a qualified third-party auditor–such as I.S. Partners–or consulting firm with experience in vendor risk management, third-party risk assessments, information security, and data privacy. These auditors should have the skills to evaluate vendors’ security policies, internal controls, regulatory compliance, and potential risks that could arise from third-party engagements, thereby ensuring that organizations are proactively mitigating potential vulnerabilities when partnering with vendors.
Fill out the form and we’ll put you in touch with one of our experienced auditors. Your contact information stays with us and is only used to talk with you about your Third Party Risk Assessment—we do not sell or share your contact information with anyone.