The Importance of Third-Party Risk Management Workflows

Generally speaking, a workflow is a sequence of tasks that move data. Today, regulations drive processes, processes require controls, controls involve approvals and approvals usually get reported. That’s a simple way of highlighting how nit-picky doing anything in the corporate world often is. But that’s also a workflow, right? One thing must happen before another, then it goes to someone else and then on and on.  

Why Are Workflows Important to Third-Party Risk?  

Creating a system and integrating with a workflow solution, first and foremost, allows organizations to spend less time monitoring vendors and more time analyzing risk. But that’s not the only reason.

 Workflows are crucial to third-party risk management because of the following:

1.  Third-party risk management is a task-intensive process. Looking at the third-party risk management lifecycle, it’s easy to see that all of these stages require their own set of processes. Each of those processes require a sequence of tasks, and with that comes lots of room for failure. Sure, having checklists and procedures is a huge help, but anyone who regularly follows the same procedure or checklist knows that eventually, you stop checking. This is why an automated workflow software is a great asset to task-heavy processes.  

2. There is a need for collaboration between various departments. Any time you need to move data or share tasks with a department outside your own, the back-and-forth can get cumbersome. It’s very easy for small tasks to get dropped, especially if there aren’t resources dedicated to follow-ups and moving things along. Having a workflow tool to assist with the process alleviates some huge burdens involved with inter-departmental collaboration.  

3. Third-party risk management requires that details are reported to decision-making personnel. It’s strongly recommended (and in most cases, required) that third-party risk management have strong oversight from the board of directors and executive leadership. Not only does critical and high-risk information need to get to the right people, but there are many controls, approvals and checkpoints that are required by most governing bodies for which your organization is accountable. Workflows can be a lifesaver in alleviating human error and assuring the process goes according to policy, program and procedure.  

What Should You Look for in a Third-Party Risk Management Workflow Solution?

When we talk about a workflow tool or software functionality, we’re essentially talking about adding a function to the software of an existing process, which then assures things get accomplished in the right order, with the right information and that it goes to the right people. But how? Typically, this is done with inquisitive dashboards, appropriate notifications and readily available information.

There are four other things you’ll want to make sure your third-party risk management software solution or tool can take care of: 

• Compatibility. A workflow is most effective when it’s incorporated into your system of record. 
• Customization. Many workflows available are not easily customized. When you have to adjust your process in order to fit the software mechanisms that is supposed to be helping you, it may be time to seek out a better solution.  
• Notifications. Ideally, a good workflow will have configurable alerts, notifications and escalation parameters. 
• Approvals. Approval phases and task dependencies can restrict certain tasks from being completed without approval and/or a preliminary step. 

Third-party risk management includes great complexity, but with the adaption of automated tasking, permissions, notifications and approvals, an integrated workflow can be just what you need to turn a cumbersome necessity into a truly invaluable asset to any organization.  

You third-party risk management workflows and procedures should be documented. Download the eBook.