Third-party breaches are a growing threat to organizations. In fact, 51% of organizations have experienced a breach caused by a third-party. With the consequences of such a breach including financial loss, damaged reputation, loss of sensitive company information, and potential lawsuits, effective TPRM is critical to the continued success of any organization. But, what is TPRM exactly?
Third-party risk management, or TPRM, is the process of identifying, assessing, and controlling risks that arise from the use of third-party vendors, suppliers, and service providers. The third-party can be any external entity that provides goods or services to an organization, including suppliers, contractors, outsourcing partners, and others. TPRM is a broader concept that includes vendor risk management as one of its components. Ultimately, TPRM takes a more holistic approach to managing risks associated with all types of third-party relationships.
Why Its Important
TPRM is a rapidly growing practice, mainly due to the increased reliance on outsourcing. Third-party services can boost business speed and maximize budget but may come at the cost of compromised cybersecurity. Considering vendor cybersecurity posture is crucial to prevent vulnerabilities that can lead to a third-party data breach. Hackers target third parties for supply-chain attacks as they can gain access to multiple entities, increasing the impact of their attack.
Organizations are growing increasingly intertwined with third-party vendors. Not only do today’s third parties require more access to an organization’s data assets but they also work with their own third-parties. This has exponentially increased third-party networks’ size and complexity. As a result, managing third-party risks while maintaining business efficiency is a critical challenge for organizational leaders.
In light of these risks, can organizations afford to trust vendors’ self-reports on their security posture?
What It Does
Effective TPRM identifies vendors in your third-party network, verifies their active status, assesses their level of access to information, and confirms it is the appropriate level of access. Create a risk profile for each vendor to ensure consistent vetting processes and enhance understanding of your third-party network. Once you understand the risk each vendor presents, proper controls must be put in place to manage that risk. TPRM should also assess the potential impact on the principal organization if confidential information is leaked due to a compromise of the third party’s networks and data.
TPRM must begin the moment a new vendor or supplier is onboarded and continue over the course of the business relationship. It only ends when the third-party relationship is completely dissolved.
Benefits of TPRM Software
Using third-party risk software effectively enables organizations to implement a successful risk management program for its third parties. TPRM software provides consistency and allows for the automation of risk management activities, which maximizes ROI, productivity, and results.
Utilizing TPRM software often leads to:
- Automated risk monitoring
- Increased data visibility and reporting capabilities
- Simplified assessments and audits
- Time and cost savings
- Improved vendor performance
- Remediation recommendations
- Improved security posture
Request a demo today to learn how myCYPR can help your organization manage third-party risk.