Software and Outsourcing Activities Benefit Third-Party Risk Management at Any Maturity Level

The third-party risk management (TPRM) process involves the design, development, implementation, and maintenance of a comprehensive framework. This framework often has complex and interdependent processes, with multiple stakeholders. Small TPRM teams and large vendor inventories only add to the complexity and work effort.

Even for experienced TPRM professionals who have more resources, there’s no shortage of work that must be done. Multiple spreadsheets, manual processes, and labor-intensive administrative upkeep are just some of the things that weigh down TPRM teams, regardless of size or maturity. As a solution, many organizations now offer professional TPRM services. Outsourcing specific parts or processes of your TPRM program can help you establish effective processes, create additional bandwidth, supplement expertise, and achieve regulatory compliance.

The Challenge of Building a New Third-Party Risk Management Program 

If you’re in the early stages of building and managing a TPRM program, you’ll soon realize it takes time and a lot of hard work. You need to identify, develop, and implement the necessary processes and workflows, not to mention an effective governance structure and foundational documents. Plus, your stakeholders will require their own resources, such as comprehensive TPRM reporting, education, and training. 

The time and effort you spend will only increase if these processes rely on manual spreadsheets, emails, and collecting physical vendor documents. It will be a struggle to keep up and meet deadlines, which can lead to avoidable errors and audit findings. As a better alternative, you can engage a professional TPRM services firm to provide you with a SaaS tool specifically designed to address and manage all the complex and interdependent processes across the third-party risk management lifecycle. 

4 Ways That New Programs Can Benefit From Third-Party Risk Management Software

As you build your new TPRM program, you’ll discover just how many activities are involved. A dedicated TPRM platform will offer a variety of cost and time-saving features such as: 

1. Built-in processes and workflows. These are often designed to address each stage and required activity in the TPRM lifecycle, including:
   • Inherent risk assessments
   • Methodologies to automatically calculate risk ratings
   • Vendor risk ratings and criticality
   • Vendor risk questionnaires
   • Due diligence document collection and storage
   • Periodic risk re-assessments and due diligence
   • Vendor performance management
   • Contract management
2. Automation of key workflows and processes. Automating the following items can bring consistency and reduce administrative workload:
   
   • Email responses to stakeholders and vendors
   • Key date reminders (contract renewal, risk re-assessment, performance monitoring, etc.)
   • Routing for approvals
   • Red flags or alerts for at-risk/past due deliverables
     
     
3. Integrated data capture, record keeping, reporting, and audit prep. TPRM software can help organize vast amounts of data, such as:
   • Vendor inventory
   • Vendor engagement records
   • Vendor due diligence documentation and risk review
   • Issue tracking and reporting
   • Vendor communications and emails
   • Due diligence and risk re-assessment cadence, due dates, and status
   • Vendor performance reporting
   • Automated and ad-hoc reporting
   • Accessible records for easier audit preparation
     
     
4. Scalability to grow with your program. The best TPRM software solutions offer endless scalability to handle growing vendor inventories, process tracking, document storage, and reporting needs.

It’s easy to see why TPRM SaaS platforms are so popular, especially for new programs. Not only can you reduce the amount of time and effort required to get your program operational, but you can feel confident about the efficiency and effectiveness of your processes. 

Improving an Established TPRM Program

Mature TPRM programs are not without their challenges, even for those that are well-established and already using dedicated TPRM software. While your software may be scalable, your internal resources may not be. 

If your organization is doing well and business is growing, that usually means more vendors to vet and manage. As more vendors are engaged, more due diligence needs to be done, resulting in more due diligence documents to collect and review, and an increased volume of subject matter expert (SME) reviews. Ongoing risk monitoring is also often neglected because it’s time-consuming and hard to execute well. There is just not enough internal capacity to handle it all. 

How Outsourcing Can Improve a Mature TPRM Program

There’s no such thing as a perfect TPRM program, but it’s always good to strive for improvement. As organizations grow and evolve over time, their TPRM processes must also adjust to shifting priorities. 

Here are some ways that outsourcing TPRM activities can improve a mature program:

• Create capacity when there is fluctuating workload. Unfortunately, TPRM SME reviews often take a back seat to what may be perceived as more pressing priorities. And that problem becomes exacerbated when there are multiple reviews to do. Outsourcing vendor risk reviews to qualified and credentialed SMEs can create bandwidth for your internal resources while ensuring vendor risk reviews are completed within a reasonable timeframe.
• Supplement missing expertise. Even if your internal SMEs have time to perform vendor risk reviews, they may not have the right level of expertise to do so effectively. It is rare for a single SME to have enough professional experience and skill to review all vendor risk domains (finance, cybersecurity, compliance, business continuity, etc.) Qualified subject matter experts should have significant experience and professional certifications and credentials for the risk domains they review. Outsourcing is a great way to ensure your vendor risk reviews are conducted by certified professionals.
• Reduce administrative tasks. One of the most time-consuming tasks for any TPRM program is collecting and organizing vendor due diligence documentation. Despite your best efforts, vendors aren’t always consistent in how or when they provide this information. Outsourcing administrative tasks allows your TPRM team to focus on activities like managing and monitoring vendor risk, supporting the business units, or preparing for audits.
• Improve risk monitoring. Setting up internet news alerts and regularly reading regulatory websites and industry news takes time and often yields irrelevant and inconsistent information. Relevant and timely information is necessary for actively and effectively monitoring vendor risk. Many TPRM services companies offer add-on vendor risk alert and monitoring services that can help your organization stay aware and take action when your vendor’s financial health decreases, there’s been a data breach, regulatory enforcement actions, or negative news about the vendor.
• Access TPRM program and process consulting. Professional third-party risk management consulting services can help you make improvements to your program and processes, from writing policies to implementing a major API integration to your TPRM system and developing vendor owner training and education.

It’s clear that effective TPRM is necessary for all organizations despite their size or TPRM maturity. Whether building a new TPRM program or improving an existing one, outsourcing is a solid strategy to make your TPRM program the best it can be.