Third-Party Risk Management

With the increasing complexity of the global market and rising competitive pressure, relationships with third parties are becoming more and more important. Corporate goals in this context include reducing costs, increasing customer satisfaction, accelerating market launch and improving profitability. Without reliable third parties with integrity, such as suppliers, service providers, consultants, vendors, contract manufacturers, brokers, distributors, resellers and agents, business entities can quickly lose touch with the competition.

In a global and increasingly interconnected world, it is necessary to integrate third parties into the network of one's own organisation. This can sometimes involve unwanted risks.

But you can manage it: Legal and regulatory requirements as well as risks in the areas of compliance, information, cybersecurity and business continuity, as well as strategic, financial and reputational risks can be identified, assessed and managed with a well-established third-party risk management programme.

• A third-party relationship is any business arrangement between an organisation and another natural or legal person - whether by contract or otherwise. Material risks of a subcontractor of the third party, a so-called fourth party, are also affected by this.
• TPRM includes compliance and management of programme requirements for third-party risk management throughout the life cycle of the relationship, starting from initiation through to termination. It also includes reporting to management.
• The basis for effective TPRM is risk-based programme requirements so that time and effort are focused on managing third parties that pose the greatest risks to the organisation.
• Clear roles and jurisdictions in a “three lines of defence” model are necessary in order to be able to respond quickly to changing requirements as well as to point out emerging risks.

Many business entities have recognised the need for third-party risk management. However, research shows that the need for smooth, fast and efficient processes is often countered by an isolated view of risks and a processing of information requests related to third parties that is mostly slow and perceived as cumbersome. The current approach to this issue often involves a multitude of manual and sequential processes to obtain and process the relevant data regarding the third parties.

Lack of knowledge and control of third parties can lead to losses. Global business entities in particular are subject to high risks and ever new regulatory requirements that can limit their ability to perform and jeopardise their reputation.