Explainers & Guides

Selecting a Third Party Risk Management Framework

What are Third-Party Risk Management (TPRM) Frameworks and how do you select one?

Selecting a Third Party Risk Management FrameworkSelecting a Third Party Risk Management Framework

Third-Party Risk Management (TPRM) Frameworks

So cybersecurity professionals can systematically understand risks, whilst making sure things don’t fall through the cracks, frameworks are used to conduct assessments. These assessments cover the various risks faced by a business, including:

  • Security Certifications
  • Data Protection
  • Security Governance
  • HR Security
  • IT Operations
  • Software Development
  • Network and Cloud Security
  • Physical Security
  • Business Resilience
  • Supply Chain Management
  • Financial Risk
  • Environmental, Social and Governance (ESG)

More Than Security Certifications

It is often just tempting to look for security certifications like Cyber Essentials Plus accreditation, ISO27001:2013, alignment with the NIST Cybersecurity Framework, PCI DSS compliance and SOC 2 reporting.

Unfortunately, these are just one part of the mix and don’t give you a holistic picture of the risks associated with a supplier. TPRM platforms like Risk Ledger will ask suppliers about their certifications, but also ask a holistic set of questions about other risks. You can learn more on our Supplier Assessment Framework Knowledge Base.

Reducing the Overhead of Risk Assessment

It is important that the risk management frameworks are broad enough to incorporate all these risks, but reduce the overhead for both vendors and suppliers. This is where tools like Risk Ledger help, as we automate the questionnaire process for customers. For suppliers, they can complete their risk assessment once and share it with multiple customers. Moreover, Risk Ledger then allows customers to access fourth and fifth party risk assessments, accessing insights for the vendors of vendors.

FAQs

What is third party risk management?

A third party risk assessment is the process of evaluating and managing the risks associated with the use of third-party vendors and suppliers. This involves identifying potential risks, assessing the likelihood and potential impact of those risks, and implementing measures to mitigate or manage the risks. The goal of third-party risk assessment is to ensure that organizations can effectively manage the risks associated with their use of third-party vendors and suppliers, and minimize the impact of any disruptions on their operations and customers.

How to perform a third party risk assessment?

To perform a third party risk assessment, an organization should start by identifying the third-party vendors and suppliers that are critical to its operations. The organization should then assess the potential risks associated with these vendors and suppliers, including risks related to data privacy, security, financial risk, governance risks, and business continuity. It should also evaluate the third-party vendor or supplier's risk management practices to ensure that they are aligned with its own risk management framework. Finally, the organization should implement measures to mitigate or manage the identified risks, such as requiring the vendor or supplier to implement specific security measures or contingency plans. Regular monitoring and review of third-party risk management practices is also important to ensure that they remain effective over time.

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