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Third Party Risk
A reactive approach to Third-Party Risk Management (TPRM) and Cyber Security, solely relying on regulations and compliance, is no longer sufficient in today's fast-paced technological landscape.
Organisations must adopt a proactive strategy that incorporates continuous monitoring, risk assessment, and collaboration with third-party vendors to stay ahead of emerging threats and minimise potential risks.
By being proactive, organisations can reduce the likelihood of security breaches and data compromises, and maintain a competitive edge in their respective industries.
Benefits
Integrating the suggestions into your existing framework can bring numerous benefits, including a clearer understanding of third-party risks and exposures, improved processes and controls, and targeted allocation of TPRM resources.
This will also enable non-TPRM departments to better understand their roles in managing third-party risks, ultimately leading to a more streamlined and effective risk management process.
Additionally, it will facilitate revisions to contractual templates and liability clauses, reducing the risk of financial loss and improving overall compliance with regulations.
Commercial versus Operational Relationships
In the context of Third-Party Risk Management, it is crucial to distinguish between commercial and operational relationships to accurately assess and mitigate risks.
This involves identifying the entity that actually provides operational-related risks, which may not necessarily be the primary entity with which a contract is signed.
For example, in a case where a Saudi Arabian bank outsources processing to an Indian entity, conducting due diligence solely on the Saudi Arabian bank would be insufficient, as the real risk lies with the Indian entity, which may be subject to different regulatory requirements and risks.
Danger of Change Management
System unavailability can be caused by software and system updates that were not implemented properly, leading to security vulnerabilities that can be exploited by cyber attackers. This can result in data breaches, identity theft, and financial losses, compromising sensitive information.
When assessing third-party risk, it's important to evaluate their change management process to ensure it aligns with your organisation's risk tolerance. This includes reviewing their procedures for managing changes to their systems, software, and infrastructure, as well as their approach to testing, deployment, and rollback.
