Using third party suppliers puts organizations at risk of penalties and reputational damage, which can lead to significant downstream operational cost implications. Organizations are increasingly reliant on third parties, such as vendors, suppliers, service providers, agents, distributors, brokers, joint ventures and resellers, to deliver business-critical products and services. Therefore, it is essential that third party risk management (TPRM) is carried out strategically and correctly for the approval and management of third parties. Developing and implementing effective strategies can be challenging, so don’t hesitate to seek outside help.
Follow this field guide to third party risk management to optimize your organization's performance, reputation and security.
Failing to provide adequate TPRM can pose various risks such as, reputational risks, technology risks, data privacy, operational risks, regulatory and compliance, and financial risks. It is essential to cover these aspects to enable business growth and resilience. Research suggests that 60% of organizations have faced problems due to insufficiently rigorous programs, which is why 77% of businesses say that TPRM is a strategic priority.
Successful TPRM programs across industries should follow a defined process for identifying, monitoring and managing third party risks. Our analysis have allowed us to define the key steps in helping your organization upgrade their TPRM programs. KPMG’s framework for effective TPRM operating model is based on four pillars; governance, process, infrastructure, and data.
Findings from over 14 countries and 1’000 corporations suggest that the majority of industries need to improve their TPRM program. Transformation is driven by a constant cycle of program uplifts, process optimization and innovation. We have derived four key steps to help you make this happen.
Optimizing your TPRM program will help your organizations performance, reputation and security. The four key steps (ie. Agree on the vision, build the model, optimize the process and evolve and innovate) will help your business improve and update the TPRM. However, TPRM programs can be very complex depending on your company’s structure and the multiple risks that are impactful. Asking for help will only improve your efficiency, resilience and risk aversion.
Get more insight here: Third Party Risk Management Outlook 2020