What is TPRM? Third party risk management (TPRM) is a service that manages and monitors the risk of third party vendors. More businesses and information security experts today work closely with third party vendors, which may put them at an increased risk of cyber security threats. Working with a TPRM provides your business with around-the-clock third party risk assessment and continuous monitoring while still protecting the third-party ecosystem.
RiskRecon, a MasterCard company, knows that many of its customers rely on third party vendors to meet logistical needs, but that carries a certain degree of risk. When a company chooses to work with a third-party vendor, they accept the financial, cyber security, and performance risks that come with that agreement. Third party risk management is about protecting your data and maintaining all compliance expectations, even when working with many vendors.
Why You Need Third-Party Risk Management
The world of cybersecurity is continually changing. As we find solutions to the most common security breaches, new threats are right around the corner. In addition, data is being shared at record numbers, making predicting and overcoming cyber threats even more difficult. Compliance requirements are also constantly changing, requiring service providers to work with organizations that follow the best practices for cybersecurity.
TPRM is crucial because failing to assess and identify risks can pose real security threats to your data. For example, your organization may be subject to supply chain attacks or even data breaches. This often has a trickle-down effect, which may damage customer trust and ruin the overall reputation of your organization. A single security threat that isn't handled properly and timely could cost any business significant revenue, which may last for many years. Additionally, positive security ratings can have positive results on a business.
Deciding what security threats to focus on can be difficult, especially with increasing threats in today's digital world. That's where TPRM frameworks become useful. By setting certain criteria and security points, you can learn more about your third-party financial risks, including the most important ones to follow up on.
TPRM is effective in preventing vendor cyber security breaches. Even in cases when you can't fully prevent security breaches, the right TPRM framework can help you minimize risk and data loss. Setting up a TPRM framework also allows you to bulk security processes, ensuring you don't miss any important threats.
How Does Third Party Risk Management Help Secure Your Organization?
There is no universal approach to addressing third party risk. Instead, the best frameworks are customized to meet the business's and its third party vendors' security needs. The best TPRM frameworks complete a number of tasks, including:
- Identifying the financial services risks of third party vendors through a thorough risk assessment or questionnaires.
- Screening existing third party vendors with an in-depth vendor risk assessment.
- Offering guidance on supply chain compliance requirements.
- Continually assessing the risk of vendors.
- Actively flagging and mitigating risk.
- Suggesting solutions to active threats.
- Reporting and recordkeeping to maintain compliance.
- Predicting the likeliness of future threats.
- Maintain effective third party relationships with your third party vendors.
A TPRM framework refers to a set of security controls or guidelines that monitor third party vendors and locate vulnerabilities. A good TPRM program also provides an assessment that mitigates short- and long-term risks in the supply chain.
Characteristics of a Strong Third Party Risk Management Framework
Reviewing some of the most-used TPRM frameworks can help build a foundation for security. In addition, understanding the characteristics of a strong third party risk management framework can help you choose the right services for your organization. Here are a few key framework components used today:
Ability to Identify Risk
The first and perhaps single most important characteristic of a third party risk management framework is its ability to identify risk. Risk identification may look different depending on the service you choose, but it should accurately document potential risks in real time. The best frameworks list active and likely risks, allowing you to respond to current threats while also preparing for ones you're likely to experience soon.
The ability to identify risk is done through third-party identification and screening. Some may also conduct assessments with the purpose of penetration testing. A good risk management framework also follows the best practices for compliance requirements based on applicable laws.
Capability to Identify Risk Impact
Potential risks come at varying threat levels. In addition to identifying risks, a good framework should also accurately assess the impact of those risks. This makes it easier for organizations to prioritize and plan solutions based on the threat level. Organizations may use different criteria for categorizing risk, making a customized framework important.
Risk impact may be measured in different ways, depending on the framework. Creating a risk threshold is one of the most common ways to identify risk impact. Businesses can put plans into place that are automatically enacted when threats exceed a certain threshold. Prompt response to threats with actionable solutions can provide organizations with the necessary damage control.
Option to Recommend Solutions
Many frameworks can identify vendor risk, but not all can recommend solutions. A solid TPRM should provide you with actionable solutions to deal with current threats and minimize your future risk profile. Some examples of solutions may include staff training, technology updates, or additional screening. Your TPRM program should also include a shared assessment that allows you to understand vendor risk management and cybersecurity risk.
Ability to Mitigate Risk
Risk mitigation is a solution in motion. Take your TPRM framework to a more secure level by implementing steps to ensure solutions are enacted promptly. Some businesses may even set up automatic solutions that activate upon certain threats. Even with full automation, some quality control and monitoring ensure that security threats are managed properly.
Capacity to Monitor Risk
The best TPRM frameworks continually monitor risk. This includes monitoring security threats, even while responding to other immediate ones. The risk monitoring needs of a business may vary over time. Therefore, you need a TPRM framework capable of continually monitoring risk between varying threat levels with ongoing assessments. Monitoring vendor risk can also help businesses manage the operational vendor risk that comes with compliance and security needs.
The best practices of any TPRM program value security and compliance equally. No single TPRM framework can solve your security needs. Instead, a customized approach is crucial. RiskRecon can meet a wide range of needs, including federal deposit insurance corporate compliance requirements.
How RiskRecon Can Help
RiskRecon is here with the solutions you need to create a framework for building and bulking securing processes. Our comprehensive tools allow you to monitor third party cyber risks. Each framework is completely customized to your unique needs. We use over 35 criteria to create a secure and actionable framework.
How does RiskRecon differ from other third party risk management providers and information security experts? We don't just notify you of the cyber risk. We provide you with a detailed assessment, so you know exactly how to understand and solve the threats. We have careful frameworks in place that automatically filter data and prioritize operational risk. This helps you choose the threats most imminent to your organization. It also helps you prepare to tackle common or upcoming threats that may become more significant later.
RiskRecon aims to maximize efficiency, thoroughly review existing vendors with updated assessments, streamline new vendors, and implement automatic action plans when threats exceed a certain threshold. We also aim to educate the businesses we work with to help them better understand the framework and compliance expectations and choose the guidelines that make the most sense for their business. Our data collection practices are accurate, which helps businesses choose the vendors with the least risk. We're proud to achieve a 99.1% accuracy rate with exceptional compliance ratings.
We can create customized plans that best manage risk by identifying critical vulnerabilities. Transparency is also important to RiskRecon, meaning you always know the current threat level of your information security protocols. Sign up for a RiskRecon demo to learn how we can create a customized framework to meet your organization's needs and learn the best ways to manage third party risk.