Third parties are a key component of today’s increasingly complex, digital business eco-systems. Businesses tend to use a multitude of third parties in different ways to deliver goods and services and therefore failure of a third party to deliver is a significant source of risk.
Effective Third Party Risk Management (TPRM) is critical because the organization remains accountable to its customers and markets when third parties fail to deliver goods and services. Six in ten of our clients have suffered their largest reputational impact because of failures by third parties.1
Only a technology-enabled, enterprise-wide program can secure the areas of vulnerability and unite stakeholders across procurement, business, risk oversight and legal to understand where and how third parties are being used and whether that is acceptable. These groups must come together in an organized manner to drive a risk-based selection and management of third parties. Third party risk is a strategic priority whose success rests on four pillars: governance, process, infrastructure, and data. Our framework is laid out below: