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The need for true third-party risk intelligence – data that provides companies with important insights into the relative levels of risk within third-party relationships – is accelerating. As third-party risk management (TPRM) discipline matures, regulators, investors, and other stakeholders want to know that organizations are managing risks and are operationally resilient in the face of change. Organizations need the agility to quickly detect and respond to alterations in the risk profiles of third parties.
In the past, third-party risk data was usually used manually – analysts would research certain pieces of information when they were doing due diligence on a new relationship, for example. Even just a decade ago, the kinds of vendor information that might be examined would have been fairly limited – perhaps just financial information and a quick online search.
Today, all that has changed. There is a new understanding of the potential sources of risk that third-party relationships can pose and the ways in which a loss event can happen. In addition, new kinds of risks have emerged, such as cyber risk and the type of reputational risk posed by social media. Lastly, these risks are evolving at speed, and that velocity seems to be accelerating. As a result, the kinds and timeliness of data that are available for TPRM programs have grown too – giving organizations the intelligence to manage these risks with the nimbleness required.
Exploring TPRM Intelligence
So what kinds of third-party risk intelligence can be integrated into a TPRM program’s technology platform today? Understanding the types of data is an important first step in seeing the possibilities of this approach. Key data types include:
Many of the partners that Aravo works with provide a range of different types of third-party data to complement information gathering and decision making. The examples listed above can help organizations begin the exploration process for finding third-party data that meets their needs.
Connecting TPRM Intelligence
The “secret sauce” to TPRM intelligence is how these data feeds are linked to the TPRM platform, so that the information is flowing in real time into the right places, including workflows, dashboards, and reports. This TPRM intelligence is useful in many stages of the third-party relationship, including:
Selection – TPRM intelligence, through automated data feeds, can enable risk professionals to complete research and analysis of potential vendors much more quickly than through manual methods. Automated lists of vendors that the organization has decided not to engage with can also be created and kept current through automated feeds.
Due Diligence – Information provided in risk assessments can be validated automatically through TPRM risk intelligence, saving time and resources.
Continuous Monitoring – TPRM risk intelligence feeds can be set up to detect changes in a vendor’s risk status, triggering workflow actions. For example, an alert can be sent out to specific individuals in the organization if a vendor’s information security score drops below a certain threshold.
Fourth-Party Management – Keeping track of risks within fourth parties, fifth parties, and so on, is nearly impossible to achieve manually. The scope of the work required is just too great. TPRM intelligence can make fourth parties more discoverable, and also flag fourth party risks.
In summary, manual approaches to TPRM research and analysis are no longer appropriate. Automated data feeds can power a whole new approach to TPRM intelligence, enabling organizations to recognize risk sooner and respond with increased operational resilience.