The world is constantly evolving, influenced by trends that shape our choices—from the clothes we wear to the social media platforms we use, to the wellness diets we follow.
The realm of Third-Party Risk Management (TPRM) is no different, filled with emerging regulatory topics, new buzzwords, and an endless supply of compliance acronyms (such as ABAC, ESG, GRC, GDPR, PII, SIG, ISO, CCPA, and the recently introduced DORA).
Over the years, I have observed a notable trend within the technology sector: TPRM vendors are increasingly focusing on three core concepts as reasons to invest in their platforms—centralization, automation, and integration. As much as I am a huge proponent of centralizing third-party data, automating business processes, and integrating with other data providers, I do not consider these distinguishing features but rather, table stakes that should be part of any TPRM software approach.
In my experience, effective TPRM programs require capabilities from their tech stack that extend beyond centralization, integration, and automation.
These advanced functionalities enhance risk visibility and empower organizations to customize their risk management strategies, ultimately leading to more informed decision-making and stronger third-party relationships. This blog aims to highlight several key capabilities that organizations should seek when investing in TPRM software, beyond the centralization, integration, and automation table stakes.
Organizations must grasp the various relationships involving their third parties to accurately assess their impact. For instance, a third party contracted for multiple products or services, supporting critical initiatives, participating in monthly performance reviews, and subject to multiple domain-specific risk assessments exemplifies a “one-to-many” data model (one third party linked to many engagements, contracts, KPIs, and assessments). Best practice TPRM programs utilize software that can establish relevant associations, track risks associated with each engagement within a single third-party entity, and adapt each to new compliance needs as they arise.
Organizations evaluate numerous aspects of their third parties, each of which can introduce complexity to risk assessment methodologies. For example, entity-level risk (such as geopolitical factors and financial stability) may carry different significance than engagement-level risk (like data access and service criticality) or domain-level risk (including cybersecurity and data privacy). Identifying and tracking each variable can create a risk scoring matrix for a single entity.
Additionally, each risk category requires distinct weightings and may include non-starters depending on the characteristics of the third party or its lack of formal controls (e.g., being based in North Korea or appearing on multiple sanctions lists). Best-practice TPRM programs apply methodologies that can visualize and associate multiple layers of third-party risk where clarity and accuracy are available only through purpose-built TPRM technologies that meet these needs.
TPRM business processes can quickly escalate in complexity. For instance, a newly nominated third party might undergo a simple preliminary assessment, receive a low-risk score, and proceed to formal onboarding without additional steps. Conversely, a third party with a high-risk score may trigger multiple processes and require input from various teams to assess whether the associated risks can be accepted. Potential auto-triggered processes for high-risk third parties could include additional domain-specific assessments, integration with external risk intelligence data providers for further information, refined contract terms, a reassessment and monitoring schedule, and enhanced incident response plans to ensure swift action in case of breaches or issues.
To effectively manage the complexity of TPRM business processes, organizations need technology that can initiate a wide array of controls, reassessments, and defensive actions—such as calculating data inputs for risk scores, auto-triggering processes across teams, terminating processes based on prior inputs, and sending email notifications to both internal teams and external third-party contacts.
Aravo understands that organizations require more than just centralization, integration, and automation. Those managing intricate TPRM programs need a flexible data model that can accurately represent the web of relationships and domains associated with third parties. This includes a powerful scoring engine capable of generating various risk scorecards that roll up into an aggregate third-party profile risk score, alongside a versatile workflow builder that can automate numerous actions at any stage of the TPRM process.
With over 25 years of experience in TPRM, Aravo offers an extensible data model that captures all third-party relationships, a robust scoring engine tailored for unique scorecards, and a no-code, drag-and-drop workflow builder designed to automate an extensive range of tasks for users, teams, and systems.
Contact Aravo to see our Intelligence First PlatformTM in action and learn how we can help your TPRM team go beyond centralization, integration, and automation.
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