Navigating the Third Party Risk Management Lifecycle

Navigating the Third Party Risk Management Lifecycle: A Comprehensive Guide

By: Beaconer, May 4, 2024

Navigating the Third Party Risk Management Lifecycle: A Comprehensive Guide

Modern businesses’ operations rely primarily on coordination with third parties. Companies rely on external suppliers, vendors, and service providers to help them reach objectives that satisfy their clients. However, to secure the company’s data, assets, and reputation, the risks connected to these connections should be identified, assessed, and analyzed with the help of robust third party risk management. About 98% of the companies worldwide are often linked with about one third party vendor backed by the experience of data breaches in the past couple of years, which is sufficient to consider before hiring with these providers. 

Therefore it is the most vital attribute involved with the risk management process. The categorization and identification of these third party risks, due diligence, risk assessment, etc, are a couple of stages that are included in the lifecycle of third party risk management.



About Third Parties

These days, the environment of businesses comprises extended enterprises. These include support service providers, supplies, affiliated companies, sales agents, and distributors. It is an extended company that comprises everything through the alliance of the joint venture to the different subsidiaries. 

With the continued globalization, the entire third party network becomes challenging. The perks associated with the third parties are numerous as they include fewer costs, accessing scarcity of knowledge, and enhanced strategic agility with the perks that arrive with the responsibility for the implementation of the appropriate oversights.

Third Party Risk Management Lifecycle


Irrespective of industry or size, most firms engage with third party vendors who require them to grant access to the data and network, which expands the entire risk surface. As a result, a lot is required for securing data and implementing defensive measures within the company since the vendor might fail to safeguard the data and the data of the customers.

These days, third party risk assessment is an urgent need due to the growing digital globalization and transformations. Whenever several third party vendors are entering into the network, third party data breaches prove hazardous. Therefore, it is important to gain visibility a better control over each data touch point, avoiding them.

The average cost for data breaches has increased to $4.45 million in 2023, marking a 15.3% rise from 2020. Alternatively, the regulations towards third party risk management are growing across each industry. The firms should ensure that the entire ecosystem of third-parties are safer like the internal network for complying with them.

Explore our Third Party Risk Assessment: Book free Demo!

Book a demo

Importance of TPRM Lifecycle

As security and risk management teams spent the last year adapting to rapid digital transformation in the wake of increased, large-scale, successful cyberattacks, TPM has become a key focus for organizations. Security teams are receiving board-level pressure to implement management programs, causing them to assess all aspects of their TPM lifecycle. When given a closer look, the importance of the role that third party and TPRM solution plays in maintaining a strong security posture across the organization is magnified.  

Steps In The Third Party Risk Management Lifecycle

There are a few primary stages involved across the lifecycle of a third party, each of which comprises numerous steps. These involve specific points across the relationships, and it is vital to know about the risks that prevail, ensuring the risk mitigation of the vendors as follows:

Pre-Contract Risk Management

The initial stage involved in the third party risk management lifecycle arrives right before the initiation of the relationship before you enter into the best contractual agreement. There are two complex activities taking place. The initial activities involve the third party risk assessment with the aim of identifying and understanding the risks that are specifically inherent across the relationships.

Knowing about these inherent third party risks is important since you can use the details to third party cyber risk assessment. It is a vital step in the risk management process that enables you to dive deeper into the systems, policies, and controls to determine whether there are any residual risks that you should address.


The main element involved with third party risk management is creating good contracting principles and provisions. It is vital to know about the risks that are often shared or assumed by the relationship parties, striking a significant balance in the manner in which the risks are distributed. The following are the provisions that mitigate the third and fourth party risks involved in the contracts.

  • Business Continuity and Disaster Recovery cover what happens in the event of a service interruption. It includes the right to test the business’s continuity plans. 
  • Data Ownership and Transfer: It identifies the ones owning data that gets stored or collected and the processes that get followed to get the data back whenever required.
  • Indemnity and Liability: Enables relief when the vendor performs anything wrong or falls at performing as it sets the limits surrounding the losses resulting from vendor failure.
  • Information Security and Privacy: It is different from data ownership as it limits the data use that permits the vendor to use data whenever needed for performing these services. 
  • Right to Audit: Offers audit to the vendor operations and records, ensuring that they meet the contractual needs, industry standards, and compliance with the laws and regulations.

Post-Contract Monitoring

The last stage involves the monitoring stage that initiates after the signing of the contract. It is where the real risk takes place. Sadly it is when the one that gains less amount of attention and focus. It is the reason why effective risk monitoring is essential for robust third party risk management. There are about four vital activities that get integrated into the process of post-contract monitoring. 

  • Continuous Monitoring: These are used to offer ongoing visibility into the posture of risks as the core third parties, mainly through the data collected from business intelligence tools. Continuous monitoring allows you to maintain a recent look into the risks with the third parties arriving from the changes made to the new lawsuits, credit ratings, main layoffs, and significant events impacting their health.
  • Point-In-Time Monitoring: These activities enable you to periodically perform an in-depth dive into the risks by examining and questionnaires evidence-based documents like SOC reports, information security policies, and financial statements.
  • Risk Re-assessments: Risks change like the third party connections as they evolve or grow. It is important to reassess the risks periodically evaluating things that have changed to determine the additional diligence that is required whenever there are contractual changes required.

Get started: Request a one-to-one Demo!

Book a demo


Building a robust and effective approach to the third party risk management lifecycle requires the adoption of a proper framework. This framework can help ensure that you are imposing the required fundamentals, such as policies, systems, and processes, offering consistency and quality to the functioning of risk management.

Author Bio

Nagaraj Kuppuswamy

Nagaraj Kuppuswamy is the Co-founder and CEO of Beaconer, an esteemed enterprise specializing in managed third-party risk using the cloud native AI based solution. With an extensive portfolio of accolades and industry certifications, Nagaraj stands out as a seasoned expert, boasting over 16 years of dedicated involvement in the field of Cybersecurity. Throughout the course of their career, he has predominantly focused on elevating the realm of third-party risk assessment.


Don't let vendor risks threaten your business.
Take charge with Beaconer's cutting-edge third-party risk management solutions and see the change.

Book a Demo