Financial Services Organizations Bank on Aravo for Third-Party Risk Management

Emerging Third-Party Risks Include Compliance, Cloud Concentration and ESG

SAN FRANCISCO – July 11, 2023 – Aravo, the leading provider of third-party risk and resilience solutions, today announced continued momentum as financial services organizations adopt the Aravo platform to manage third-party risks.

Interest in third-party risk management (TPRM) programs has broadened across most industries over the past two years due to third parties:

• Working with an increasing number of third parties themselves
• Having increased access to an organization’s data
• Providing services outside of the company’s core business

Specifically, the following third-party risks are emerging within the financial services industry:

• Compliance Risk. Keeping up with the volume of regulatory change dominates the list of compliance challenges for financial services firms. Forty-eight percent of respondents from global banks in a Thomson Reuters survey^[i] said they spend between 8 and 10 hours per week tracking and analyzing regulatory developments. More than one-third also report having outsourced some or all of their regulatory compliance functionality. The continued growth in the number of regulations and use of third parties only intensifies firms’ exposure to compliance risk.
  
  At the same time, fines on financial institutions for non-compliance are projected to rise in the coming years. Many enforcement agencies do not distinguish between a business and its third parties when it comes to non-compliance failures and penalties. For example, global anti-money laundering penalties recorded an increase of 50 percent in 2022, totaling nearly $5 billion.^[ii]

• Cloud Concentration Risk. Financial services enterprises overwhelmingly utilize at least two cloud deployment types (90%) and more than one public cloud (80%)^[iii], according to Forrester.  
  
  This rise in public cloud usage brings concentration risk which occurs when points of concentration within an institution’s operating model create a single point of failure that cascade throughout the organization. Overreliance on a single cloud vendor in a specific geographic location can impede agility in response to disruptions caused by other risks such as geopolitical or cybersecurity. Cloud exploitation incidents grew 95% last year^[iv], nearly tripling from 2021. Adversaries increasingly target cloud environments today.

• ESG Risk. According to Gartner^®,^[v] “environmental risks are among the top four challenges for financial organizations in 2022.”
  
  Increasing stakeholder expectations and evolving regulatory requirements put higher pressure on financial services firms to identify, measure and disclose climate and other environmental risks. They need to design metrics that align with widely-adopted ESG frameworks, perform materiality assessments and provide assurance in external ESG reporting.

“Staying on top of these emerging third-party risks helps financial services monitor and manage systemic risks in their extended enterprise,” said Dean Alms, chief product officer at Aravo. “Aravo has domain expertise, flexible applications and packaged integrations that leads the industry and allows customers to build and expand their third-party risk programs with the speed of regulatory change and insight into multiple threats to business operations. As a result, both global and regional financial services organizations are turning to Aravo for third-party risk management to automate an otherwise labor-intensive effort, comply with regulations and avoid financial penalties.”

With the Aravo Third Party Management platform, financial services firms benefit from:

• Unified visibility into all third parties and their profiles across 36 risk domains, including financial viability, legal status, anti-bribery and anti-corruption (ABAC), cybersecurity, data privacy, ESG and regulatory compliance, throughout the lifecycle of the relationship.
• Process automation to eliminate manually-intensive data capture and evaluation for thousands of third-party relationships.
• Embedded best practices aligned to industry standards, frameworks and regulations to quickly stand-up compliance risk programs.
• Onboarding new third-party relationships with speed and confidence.
• Continuous monitoring with integrations to periodic and real-time risk intelligence data to identify which of the critical third parties present the highest risk and proactively mitigate through corrective actions.
• Complete auditability of the entire process to support both internal and external audits. Aravo supports multiple audit trail views which include capabilities to track system configuration changes and how risk models have evolved over time. Reports and dashboards of the audit trail can be created to demonstrate compliance to management, the board and regulators.
• Aravo’s Strategic Alignment Framework™, an adaptive methodology that helps prioritize business and operational objectives, drives organizational alignment and establishes a master blueprint and phased roadmap to achieve a customer’s long-term TPRM vision.

Additional Resources

• LinkedIn Live: Finding the Balance: Regulatory Compliance and Stakeholder Expectations in the Financial Industry
• Third-Party Risk Management for Financial Services
• Strategic Alignment Framework
• Financial Services Industry Solutions

About Aravo

Aravo delivers the smartest third-party risk and resilience solutions, powered by intelligent automation. As a centralized system of record for all third-party data, Aravo provides organizations with a complete view of their third-party ecosystem throughout the lifecycle of the relationship and across multiple risk domains including ABAC, ESG, data privacy, InfoSec, financial, ethics, supply chain resilience, and business continuity. For more than 20 years, Aravo’s award-winning technology and unrivaled domain expertise have helped the world’s most respected brands accelerate and optimize their third-party management programs, delivering better business outcomes faster and ensuring the agility to adapt as programs evolve. Learn more at aravo.com.

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