Do you feel like everything you own and everything you’ve worked for is under threat? Do you want to learn more about how to protect your company from third-party risks?
We live in a critical world and the compliance teams of today are faced with the massive feat of managing the risk towards their company’s third-party network. This network is essential to the company’s success and its growth depends on this network being protected and secure. Regulations are constantly changing, data is always evolving, and threats are becoming even more prevalent. As such, you need reliable, sound solutions that will grow and adapt to fit the unique challenges that come with the specific risks to your third parties.
The world is in turmoil and for many, it has never felt as unstable as it does now. Major global events like the COVID 19 pandemic and the military action taking place in Eastern Europe have had massive impacts across a range of industries all over the world. Third-party links always come with a certain level of risk, that’s the nature of the network, however, there has never been in a time in history where things have felt as fragile as they do now. Third-party risk management software (or TPRM) is evidently now more important than ever before.
What kind of risks can a third-party risk management solution prepare for and protect against?
We constantly hear reports of cybercrime, a new and emerging form of criminal activity emerging in the wake of the technological age. Cybercrime has been described as the “number one problem with mankind” and in 2014 it was estimated that there was $445 billion worth of damages to the global economy because of cybercrime. It can take many forms, most of which are hard to identify as a threat before it is too late. Even the most experienced tech user can become a victim of cybercrime, hence why it’s essential to have an intelligent risk management system in place to fight against these attacks.
Furthermore, business operations can be significantly interrupted by a third party. Just as the ripples from a stone dropped into a lake steadily grow in size and severity, the repercussions of a break in the supply chain or other third parties have far-reaching effects. In most cases, there is no control over these kinds of events, another reason to have a risk management solution in place that can offer alternative routes to the successful destination.
Additionally, compliance risks pose a significant threat to any business today. Regulations are constantly changing so it’s easy to become out of date and slip below the standards. Managing this risk is critical for all businesses, but especially for financial services, government organizations, and healthcare facilities. For these kinds of businesses, failing to meet compliance rules brings serious consequences so a third-party risk management solution will prevent this from happening.
The fact of the matter is that the majority of modern companies rely on third parties to continue operating successfully so any damage to those third parties causes damaging and long-lasting effects. This is where a third-party risk management solution will come to save the day – by identifying, assessing, and controlling risks that may crop up because of third parties, a company can save itself a lot of stress, expense, and time.
What does a third-party risk management solution do?
The main aims of a third-party risk management system are to:
- Help a business comply with regulations and meet specific standards.
- Assist in avoiding any unethical practices that would have devastating consequences.
- Offer security for any confidential information.
- Strengthen the security of the supply chain on which the business depends.
- Maintain a healthy and secure working environment for all employees to work safely.
- Handle disruptions from third parties effectively.
- Achieve high levels of both performance and quality.
Before the start of COVID-19, none of us could’ve imagined the disruption that a global pandemic was capable of creating. In every aspect of our lives, from work to family, health to entertainment, things changed. A pre-pandemic study found that 77% per cent of businesses questioned around the world felt that third-party risk management was a strategic priority. After the pandemic, this number rose to 85 per cent, showing just how vital solutions like these have proved to be.
A new third-party risk management study revealed that 45 percent of organizations experienced some kind of third-party security incident last year. This risk has increased since 2021, just the year before, when only 21 percent had experienced such a threat. Despite this obvious increase in risk, 8 percent of companies have implemented no third-party incident response at all, while 23 percent, almost a quarter, take a passive approach to this kind of issue. The threat can’t be over-emphasized – it is real, it is dangerous, and it can have serious consequences if action is not taken to either prevent the attack or mitigate the effects.
You may already have some versions of a third-party risk management system in place, but is it up to the task? Does it have what it takes to fight off the intelligent attacks of this modern world? 45 percent of businesses still use manual spreadsheets to assess third parties and evaluate the risks, but is this really a reliable way to ward off the complex hazards that bombard us today? These old-fashioned, manual processes make things a lot more complex and complicated, take up a lot more time and fail to stay relevant. It might take some time, effort, and investment, but it’s worth the expense when you find a reliable third-party risk management system that can give you the security you and your business need. With a system like this in place, you can make informed and insightful decisions about the future of the company, feel secure in a massively unstable financial time and sleep at night knowing you have what you need to protect your company and those that rely on it.