Risk-right simplification: Third-party management in a DORA world

Background & why now

Irish banks are entering the most significant shift in third‑party oversight in over a decade. DORA has moved from preparation into full supervisory reality, and boards are now expected to demonstrate real, operationalised control – not just frameworks on paper.

At the same time, CBI’s Outsourcing Guidance reinforces heightened expectations around governance, criticality, and lifecycle oversight.

Rather than treating these requirements as pure compliance, leading banks see a chance to overhaul long‑standing TPM pain points – heavy questionnaires, fragmented systems, slow sign‑offs and inconsistent monitoring.

With DORA and CBI expectations now clearly defined, banks can modernise TPM using technology, automation and AI to build a process that is faster, more risk‑focused and far less burdensome.

AI and workflow automation further strengthen the case for change: modern tools and systems can review documentation, analyse risk signals in real time, identify contract deviations and flag supplier issues instantly.

In short, regulatory clarity plus new technology has created the perfect moment for simplification.

Jackie Hennessy

Partner, Risk Consulting

KPMG in Ireland

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Simplified TPM – The big wins

Efficiency & supplier experience
- Streamlined supplier experience: Traditional questionnaires are long, repetitive, and often misaligned to the actual service. Moving to standardised question sets (e.g., SIG Lite for low‑risk, SIG Core for higher‑risk) reduces supplier burden and accelerates onboarding while maintaining appropriate assurance.
- Reduced noise and data load: Simplification cuts out low‑value information, reducing unnecessary escalations and freeing senior leadership from cluttered TPM reporting. The result is a more predictable, consistent process that suppliers and internal teams can navigate easily.
Cost and operational capacity
- Reduced cost: Manual due diligence consumes significant time across Procurement, IT Risk, Operational Risk, Legal and business teams. Leveraging AI‑enabled document review, automated evidence comparison and standard clause libraries materially reduces cycle time and internal workload, freeing capacity for higher‑value risk work.
- Higher‑quality data and traceability: Consolidating due diligence evidence, risk assessments, contracts, monitoring outputs and Register of Information data into one coherent structure reduces rework, prevents inconsistencies, and enhances auditability – supporting DORA/CBI compliance without additional administrative effort.
Risk insight and monitoring
- Stronger, focused risk management: Proportionality ensures that critical or important functions receive deeper scrutiny, while lower‑risk vendors follow a lighter pathway. Automated monitoring tools provide real‑time alerts on cyber threats, adverse media, certification changes or ownership shifts, enabling more targeted risk intervention.
- Enhanced oversight quality: A risk‑right model ensures that TPM generates fewer false signals and more meaningful insights. By focusing attention where risk genuinely resides, risk teams strengthen operational resilience and demonstrate clearer alignment to supervisory expectations under DORA and the CBI Outsourcing Guidance.

The importance of simplifying correctly

Protect critical services
Govern AI responsibly
Maintain core controls
Align and coordinate stakeholders

Banks must avoid over-simplifying oversight of critical or important services. These relationships require deep due diligence, rigorous contractual safeguards, resilience and exit planning, and ongoing monitoring. Any simplification must preserve the integrity of these controls.

If not done correctly: Critical service failure or regulatory breach exposing the bank to major operational disruption and supervisory challenge.

While AI tools bring speed and insight, banks must ensure responsible use – particularly as many suppliers embed AI within their own services. Due diligence needs to consider data lineage, model bias, robustness, and supplier governance practices. Human oversight remains essential.

If not done correctly: Hidden AI risks enter through suppliers, causing biased decisions, data misuse and reputational damage.

The TPM register, contract governance, and monitoring processes must remain comprehensive. Simplification should not lead to gaps in the Register of Information, missing subcontracting visibility, or reduced contractual protections. Regulators are clear that governance and control expectations remain high, regardless of process efficiency.

If not done correctly: Gaps in registers, contracts or monitoring create immediate DORA non‑compliance and audit findings.

TPM simplification involves a wide range of important stakeholders, such as Procurement, Risk, Legal, IT, Data Protection. Each stakeholder has different expectations and requirements; clear and early alignment is critical in such a complex stakeholder environment to ensure simplification doesn’t snap back into complexity.

If not done correctly: Successful simplification cannot be delivered; duplicated requirements, inconsistent processes and decisions, and avoidable compliance gaps all arise.

How KPMG Ireland can help

Across multiple Irish and EU banks, we have redesigned operating models that have reduced cycle times, cut low‑risk due diligence volume, and significantly enhanced regulatory alignment and operational resilience.

We are uniquely positioned in Ireland: we have both the regulatory expertise and the technology execution capability, we have the regulatory conversations and understand the CBI supervisory lens, and we have already implemented DORA‑aligned systems and operating models with great success.

End‑to‑end design and implementation

We support the design and implementation of modern TPM systems, helping banks establish a single end-to-end operating model aligned to DORA and CBI guidance. This includes developing the inherent risk-tiering model, criticality assessment, control catalogues, governance frameworks, updated questionnaires, and contract clause libraries.
Technology and AI enablement

Our teams bring strong technology capability, including integration of AI-driven document review, continuous monitoring tools, contract analytics, and workflow automation within leading TPM platforms. We help clients select the right tooling, configure it correctly, and embed human-in-the-loop safeguards.
Rapid pilot delivery

We run targeted pilots designed to demonstrate the impact of process transformation and simplification quickly – proving reductions in workload, cycle‑times and supplier burden, and creating momentum for broader rollout.
Multi‑disciplinary team with stakeholder alignment expertise

We bring a highly experienced, multi‑disciplinary consulting team with the breadth and depth needed to drive complex TPM transformation. Our specialists excel at navigating challenging stakeholder environments – cutting through competing priorities, eliminating conflicting requirements, and securing genuine buy‑in to accelerate outcome-driven delivery in line with regulatory expectations.

Get in touch

As DORA moves into active supervision and boards face increasing scrutiny, now is the moment to simplify TPM – without weakening control, without increasing burden, and without adding cost. We can help you achieve a safer, lighter, more automated TPM model that stands up to both regulatory and operational challenge.

Get in touch with our team and we’ll help you deliver.