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5 Steps to Scale Your Third-Party Risk Management Program

5 min read
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Third-party risk management (TPRM) is a constantly evolving practice. As regulatory expectations change, your third-party inventory expands, workloads increase, the challenge of adapting and scaling your program grows. 

What started as a small, manageable TPRM program often requires more resources and enhanced capabilities as it matures. Continuous improvement of your third-party risk management program is essential to effectively identify, assess, manage, and mitigate risks tied to third parties.  

Here we’ll highlight common areas for improvement and outline steps for effectively scaling your program for long-term success. 

What Does it Mean to Scale Third-Party Risk Management? 

Scaling third-party risk management means improving your program’s activities and processes so you can handle increased vendor volume and/or operate more effectively. You may need to do this in response to internal needs or external events. Let’s look at examples of both scenarios:  

  • Scaling third-party risk management to address internal needs – During a recent board meeting, it was revealed that the average time for third-party onboarding increased by 20%. This uptick is the result of having to manage more vendors, spreading your organization’s vendor management resources thin. Now your organization is considering changes to the onboarding process. One idea: investing in third-party risk management software to make data collection more efficient and to automate key tasks. 
  • Scaling third-party risk management to address external events – A new regulation impacting your organization requires it to ensure third parties are protecting your data. Compliance with this regulation requires stricter data protection measures and increased monitoring of third parties that access, store, or transmit your organization’s data.   

Related: Advocating for a 2025 Third-Party Risk Management Budget 

Note: How do you know when to scale your third-party risk management program? Consistently missing deadlines, an uptick in third-party risk management staff turnover, and increased third-party inventories are just a few signals that it’s time to scale your TPRM program.  

5 Steps to Scale Your Third-Party Risk Management Program 

You’ve recognized your organization needs to improve its third-party risk management program. Now you’ve got to scale and enhance. While every organization has a unique process shaped by its specific policies, scaling a program can be broken down into five key steps. 

The five steps to scale your third-party risk management program include: 

  1. Assess your current TPRM processes – Start by taking an objective look at your individual processes and how they function as a whole. Evaluate the purpose and specific objectives of each process. Consider their effectiveness and efficiency by asking questions like:  
    • Does the process deliver consistent outcomes?  
    • Has it been tested?  
    • Is it easy to execute?  
    • How much time does it take?  
    Gather feedback from your stakeholders. If they're experiencing issues with a particular process, it’s often a sign of an underlying issue that needs to be addressed. 
  2. Collect TPRM reporting – Metrics play a crucial role in scaling your TPRM program. They help confirm TPRM processes are working as intended and identify program weaknesses. To enhance your program effectively, collect and analyze reports on risk re-assessments, due diligence schedules, outstanding deliverables from vendor owners, third-party inventory volume, and resource capacity. 

    Related: Examples of Key Risk Indicators in Third-Party Risk Management 
  3. Identify TPRM gaps or weaknesses – After assessing processes and reporting, identify gaps and weaknesses. It’s important to document issues and develop an improvement plan. Create a roadmap outlining a step-by-step, incremental approach to scaling your TPRM program. 
  4. Standardize TPRM processes where possible – Standardizing processes is a highly effective strategy for scaling your third-party risk management program. It promotes consistency and thoroughness with a foundation of repeatable, reliable processes. Common areas to standardize include due diligence, risk assessments, and continuous monitoring. 
  5. Leverage technology and automation – When scaling your TPRM program, consider the role technology can play. Tools such as third-party risk management software platforms can reduce the administrative burden, freeing employees to focus on other valuable tasks. Technology streamlines workflows, reduces manual efforts, and leverages analytics to reveal insights.  
5 steps scale third party risk management program

Third-Party Risk Management Activities to Scale and Mature 

While every organization has its own priorities for scaling third-party risk management, there are some common areas that often need improving. Here are key areas your organization can evaluate to scale its third-party risk management program: 

  • Governance – Your TPRM governance and oversight documentation includes your policy, program, and procedures. The policy must accurately reflect your organization’s current TPRM practices and should be regularly reviewed and updated. A program document shows employees how TPRM processes function and when they should be executed. While the program document doesn’t provide step-by-step instructions, it’s a useful reference guide for TPRM. By reviewing, updating, and creating these documents – and ensuring they remain consistent with one another – your organization can strengthen its TPRM program.
  • Processes – TPRM processes, including onboarding and ongoing monitoring, can be improved as you scale your program. Look for opportunities where technology and automation can reduce manual efforts and increase efficiency. For example, risk intelligence can enhance your ongoing monitoring of third-party vendors. As you expand your program, review TPRM processes to ensure they still have clear objectives, desired outcomes, and well-documented workflows, roles, and responsibilities. 

    Related Content: 7 Steps to Outsource Third-Party Risk Management Activities 
  • Reporting – Effective reporting is an important consideration when scaling your program. Reports should deliver important information (including metrics), encourage action, and confirm compliance. Consider creating a risk report or dashboard that highlights key risk areas. Ensure reports are accessible to everyone who might need them, such as the board of directors and the operational team. 
  • Tools and technology – When thinking about how to expand or improve your third-party risk management program, focus on areas where you can leverage tools and technologies for improvement. Shifting away from manual processes can elevate the maturity of your program and strengthen your organization’s capacity to manage third-party risks effectively. 

Scaling your third-party risk management program doesn’t have to be an overwhelming process. The goal is progress, not perfection. By following the necessary steps to expand your program, you can accommodate growth, comply with new regulations, and continuously enhance your risk management practices to more effectively manage third-party risks. 

Learn 12 ways you can improve your third-party risk management and tips to follow. Download this complimentary eBook today. 

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