Imagine an ice cream shop that only served vanilla. For die-hard vanilla fans who never deviate, it might seem ideal. But what happens when tastes change, and new flavors are in demand? What if vanilla lovers bring their spouses, who prefer chocolate, strawberry, mint, or butter pecan? Or when kids come along and ask for bubble gum or cotton candy? A shop that only caters to vanilla enthusiasts would be ill-equipped to meet these evolving needs. It would need to diversify its offerings—and manage inventory accordingly—to stay relevant.
Now, replace the ice cream shop with your organization’s third-party risk management (TPRM) program. Just like ice cream preferences, third-party risks vary and change frequently. Risks evolve quickly and often unpredictably. Regulations tighten, forcing organizations to re-prioritize. New technologies introduce fresh vulnerabilities. Geopolitical events can create new supplier risks overnight.
That’s why it’s critical to explore some of the core complexities that define third-party variability—and what your TPRM software must be capable of handling.
Third parties can include everything from IT providers and cloud platforms to cleaning services and legal consultants. For example, a new engagement with a software development vendor that will be working behind an organization’s firewall would require a deep understanding of their cybersecurity posture. In contrast, an engagement with a landscaping service doesn’t pose the same cyber risks—it may only require a basic reputational check.
Managing these varying risk profiles means tailoring assessments, contracts, and monitoring based on the service type. A one-size-fits-all approach simply doesn’t cut it.
When third parties operate globally, compliance variability becomes a key factor. A vendor supporting European operations must comply with GDPR. One operating in the U.S. might fall under HIPAA, CCPA, or industry-specific regulations. Organizations must build flexible risk frameworks that account for regional legal nuances, often maintaining multiple compliance pathways.
Not every vendor operates at the same level of risk maturity. Startups may lack formalized security controls, while large, established vendors might have sophisticated—but rigid—risk processes. Your TPRM program needs to evaluate both ends of this spectrum fairly, balancing risk tolerance with business needs without unnecessarily overburdening smaller but essential vendors.
The type and amount of data shared with third parties is another major variability factor. A payroll provider, for example, handles highly sensitive employee information, while a landscaping contractor doesn’t. Effective TPRM requires categorizing vendors by data sensitivity and adjusting due diligence and oversight accordingly.
Third-party contracts range from simple service agreements to detailed SLAs with embedded penalties for non-compliance. Managing this complexity requires close alignment between TPRM and legal teams to ensure risk terms are appropriate and consistently enforced.
With over 25 years of experience delivering advanced TPRM solutions to some of the world’s most complex enterprises, Aravo has the expertise, workflow management functionalities, and multi-risk domain modeling capabilities to manage high variability in third-party risk. Our automated, end-to-end lifecycle management platform adapts to diverse vendor types, regulatory environments, and risk profiles.
Aravo enables tailored assessments based on service type, supports compliance with global regulations like GDPR and HIPAA, and adjusts due diligence based on vendor maturity and data sensitivity. Our powerful integration framework can also sync with contract management systems, automatically triggering processes and tasks in Aravo based on legal content in contracts requiring present or future action. This ensures organizations can scale their TPRM programs effectively while maintaining strong control and regulatory compliance.
Contact us now to see our Intelligence First PlatformTM in action and learn how we can help your TRPM team scale and succeed no matter the complexities within or variabilities across your third-party ecosystem.
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