Football season is a complicated time in the Philemon household. Like many families, I live in a house divided regarding the teams we support. My wife is a New England Patriots fan, my two boys (8 and 5) are Tampa Bay Buccaneer fans, and I am a Carolina Panthers fan (#KeepPounding). To stay engaged with each family member’s team, I find myself frequently needing to stay current with all the statuses, highlights, and scores throughout the season. Thankfully, mobile sports apps allow me to stay up to speed effortlessly.
Like a football season, Third-Party Risk Management (TPRM) programs manage a lot of scores. There are inherent risk scores, residual risk scores, aggregate third-party scores, assessment scores, engagement scores, external data provider scores, and the list can keep going.
To maintain a holistic view into your third parties, a TPRM program must have a way of centralizing activity and scores. Let’s explore some of the reasons for investing in technology with comprehensive TPRM scorecard functionality.
Scores provide a quick way of identifying risk but, just as importantly, give helpful direction into the decisions that a practitioner should make regarding next steps with the third party. For example, when reviewing a newly nominated third party, having a numeric risk score with an associated risk tier (e.g. low, medium, high, dangerous) can act as a guide into how the organization defines risky engagements.
The right TPRM technology can create efficiencies by automating the decision process based on the score presented or by utilizing AI to identify prior decisions made by risk reviewers from third parties with similar criteria and engagement specs within formal workflows.
Every risk-oriented decision is important and scores that summarize the various risk domains prior to contractual agreements arm practitioners with the insights needed to effectively engage the appropriate contacts and activities to manage each third party with consistency.
Scores serve as a foundational component in determining cadences for continuous monitoring of third parties. For instance, if a newly nominated third party plans to provide a critical product/service to the organization and exceeds a certain spend level, a high/dangerous inherent score could influence how frequently the organization initiates performance monitoring of the third party as well as triggering external domain-specific data providers for complete clarity into every aspect of the third party.
Scorecards that capture historical records in a variety of visualizations enable practitioners to quickly understand scoring trends and use the data to make ad-hoc decisions (i.e. new assessments, new questionnaires, terminate, etc.).
When scorecards are used to track organizations’ expectations of third parties, TPRM programs avoid unnecessary tasks and check-ins as the third-party scorecard can suggest the level of monitoring needed.
Scores reflect how an organization defines risk and can promote accountability to the program managers responsible for the progression of the business process. By way of illustration, if a third party’s cyber policies fall under a high-risk tier, the task owner has a unique opportunity to positively influence the third party by sharing the high-risk score with the applicable third-party contacts. In addition, it educates the contacts as to why the organization views the third-party cyber policies as risky and suggests what adjustments could be made to improve the score.
As risk and compliance practitioners, we have a unique opportunity to contribute to better business simply by being transparent about our TPRM approaches whether it’s better contractual performance, quicker responses to impromptu questionnaires, or tighter risk controls for assessments.
Scorecards offer valuable results that third-party contacts and internal stakeholders can use as the driver to improve relationships and reduce riskiness.
Third-party scorecards are pivotally infused into the core functionality of Aravo’s technology and purpose-built to provide the risk clarity needed to make confident decisions about the third parties associated with your TPRM program.
Aravo offers a powerful scoring engine that scores data collected from a variety of mechanisms like questionnaires submitted by vendors, internal questionnaires, integrations with external content providers, integration with internal systems, and bulk uploads via Excel.
The inputs received can be automatically weighted and scored according to your business rules at each level of the flexible data model in Aravo. Multiple risk scoring strategies can be utilized individually, or in combination with each other (e.g. Weighted Average, Max Score Wins, Min Score Wins, and/or your desired calculations in Excel spreadsheet functionality embedded in the Aravo system).
The resulting scores drive automated tiering/classification/segmentation which are then used for automated decision-making and intelligent workflow routing. These help ensure consistency, auditability, and saves time/effort for all stakeholders.
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