Most Common Third-Party Risk Management Compliance Mistakes

In an increasingly interconnected business world, third-party relationships have become an essential part of operations for companies of all sizes and industries. While these partnerships can offer numerous benefits, they expose organizations to risks. Businesses must have robust third-party risk management compliance practices to mitigate these risks effectively. However, despite the growing awareness of the importance of managed third-party risk many organizations still need to improve their compliance efforts. Many businesses worry about this risk because, nowadays, 80% of data breaches happen because of someone they work with, like a partner or another company.

In this blog, we will delve into the most common third-party risk management compliance mistakes and provide insights on how to avoid them.

The primary goal of common third-party risk management compliance is to ensure that third parties do not pose significant risks to the organization in areas such as data security, regulatory compliance, financial stability, reputation, and operational continuity.

Common TPRM Compliance Mistakes

Not Keeping Records

When companies need to check if everything is following the rules, they usually look at documents. But sometimes, these documents are old or don’t match the rules anymore. It’s like having a recipe that doesn’t taste good anymore because you’re using the wrong ingredients. Also, some documents must be clarified so new team members can understand them.

Not Knowing Who the Vendors Are

Knowing which companies work with your company sometimes takes a lot of work. Some teams know about certain vendors, while others know about different ones. Not having a clear list of vendors can confuse things and slow your project. It’s essential to figure out who is responsible for updating this list.

Not Knowing the Company’s Rules

Many third-party risk management programs try to follow the law and industry rules but forget their company’s rules. For example, they might need to remember to check if new vendors are trustworthy, or they need clear rules for protecting critical data. Breaking their own rules can cause problems and make it harder to get money for projects.

Always Reacting, Never Preparing

Many TPRM programs are always reacting to problems instead of preparing for them. This happens because they make the other four mistakes. When you need good records, rules, or metrics or know your vendors, you’re always playing catch-up. Being more prepared can make things go smoother, help you update documents when things change, and let you talk with others about what’s happening.

Not Measuring Progress

To see if things are getting safer, measure it. But some programs need to do this better. They might use numbers that need to show what’s happening or help the company. Good metrics should tell if there are risks and if the company is doing better. If they don’t, it slows things down.

How to Avoid Mistakes in Third-Party Risk Management Compliance

Here are four simple tips to help you be better at following the rules for third-party risk management (TPRM):

Keep All Vendor and Supplier Documents in One Place

Ensure you and your vendors can upload all the necessary documents, policies, and evidence to a central spot. Your TPRM system should be able to check these documents for essential words to see if they’re good enough. If it finds that the documents don’t meet the rules, it should let you ask the vendor for more or update documents automatically.

Set Up Rules for Picking and Checking Vendors

When making or improving your TPRM program, consider these things:

• Make clear rules, standards, and ways to keep your systems and data safe.
• Define the jobs and responsibilities of everyone on your team.
• Make a list of all the third parties you work with to understand how big the risk is.
• Sort out and group your third parties.
• Set scores and limits for risk based on how much risk your organization can handle.
• Decide how you’ll check and keep an eye on them based on how important they are.
• Pick essential things to measure your program and third parties’ performance.
• Make sure you follow the rules and contracts.
• Know what to do if something goes wrong.
• Keep your bosses and the people in charge informed.
• Plan how to fix things if there’s a problem.

All these things are essential for making a good plan for TPRM that won’t get you in trouble when someone checks it.

Find Important Numbers

Some things you should measure are:

• It is risky to work with a vendor or supplier (like how well they follow the rules).
• Information from threat experts to know more about the business world.
• How well you and your vendors are following the rules?
• If you’ve looked at all your vendors and suppliers.

Make a List of All Your Vendors

Your TPRM system should help you list all your vendors. You can either upload a list from your computer or connect it to a system you already use. When you add vendors to your list, make profiles for each. These profiles should have information about the vendor, who owns them, what technology they use, how they’re doing with being responsible, any problems they’ve had in the past, and how well they’re doing financially. All this information in one place makes everything else in TPRM much easier.

Conclusion

Managed third-party risk is critical to a successful and sustainable business strategy. Avoiding common compliance mistakes is crucial to safeguarding your organization’s reputation, financial stability, and regulatory standing. Organizations can confidently navigate the complex landscape of third-party risk management compliance by conducting thorough due diligence, implementing continuous monitoring, crafting robust contractual agreements, considering cultural differences, balancing technology with human oversight, investing in training and awareness, and establishing clear escalation procedures. The journey requires dedication and diligence, but the rewards for reduced risks and enhanced operational efficiency are worth the effort.

Here at Beaconer, we provide top-notch TPRM services. Our experts help you handle the tricky stuff, keep your business safe, and create a secure network of partners. Join us for total peace of mind when managing risks from third-party relationships.