Operational Resilience
TPRM
What is TPRM?
TPRM is a continuous process of identifying, assessing, managing, and mitigating risks associated with the use of third parties (vendors, suppliers, service providers, partners).
It encompasses a wide range of risks, including:
- Operational Risk: Disruptions to your operations stemming from a third party’s failure (outages, data breaches)
- Reputational Risk: Negative publicity due to a third party’s unethical or unlawful practices
- Financial Risk: Costs arising from a third party’s failures or contract breaches
Compliance Risk: Compliance failures due to inadequate third-party oversight
Key Components of a TPRM Program
Third-Party Inventory
- Discovery: Identify all third parties your organization interacts with. Look beyond obvious vendors to include consultants, software providers, and any entities handling sensitive data.
- Classification & Tiering: Categorize third parties by risk level based on factors like the type of data they access, criticality of their services, and geographic location.
Risk Assessment
- Tailored Questionnaires: Develop detailed questionnaires to gather information about third-party security posture, compliance, business continuity plans, and financial stability.
- On-Site Assessments: For particularly high-risk vendors, consider on-site visits to evaluate physical security and operational controls.External Data: Utilize threat intelligence sources and security rating services to supplement your own assessments.
Due Diligence
- Financial Health: Review financial statements to assess the long-term viability of critical third parties.
- Reputation Screening: Investigate potential third parties for legal violations, ethical scandals, or negative media coverage.
- Certifications & Standards: Verify that vendors uphold relevant industry certifications (e.g., SOC 2, ISO 27001).
Contractual Safeguards:
- Data Security & Privacy: Include clear data handling and breach notification clauses.
- Service Level Agreements (SLAs): Define performance expectations, uptime guarantees, and penalties for non-compliance.
- Termination & Offboarding: Outline processes for secure data return and destruction upon contract termination.
Ongoing Monitoring:
- Continuous Assessment: Schedule regular reassessments, especially for high-risk third parties.
- Performance Metrics: Track agreed-upon metrics (response times, incident rates) to identify potential issues.
- News Monitoring: Set up alerts to track news and social media mentions for red flags about your third parties.
Additional Considerations
- Governance & Ownership: Establish a central TPRM function with clear responsibility and reporting lines.
- Technology Tools: Consider implementing specialized TPRM software to streamline data collection, risk scoring, and reporting.
- Cross-Functional Collaboration: TPRM involves stakeholders from IT, procurement, legal, compliance, and business units.
Why is TPRM Important?
- Increased reliance on third parties: Modern companies use a vast network of external vendors for everything from IT services to supply chain logistics. This reliance introduces inherent risks that need to be managed.
- Regulatory pressure: Regulations such as DORA, GDPR, and CCPA mandate that businesses take responsibility for the risks posed by their third parties.
- Protecting your business: Effective TPRM safeguards your operations, reputation, and financial wellbeing from the ripple effects of third-party incidents.
- Building Trust: Strong TPRM practices demonstrate due diligence to customers and stakeholders.
WHO DOES IT IMPACT?
Implementing a succesful TPRM Program
1
TPRM Strategy & Roadmap
Helping organizations establish a comprehensive TPRM framework, including risk assessment methodologies, governance models, and technology selection.
2
Vendor Due Diligence
Conducting thorough risk assessments of third parties, covering security practices, financial health, operational resilience, and compliance.
3
Contract Negotiation & Risk Mitigation
Supporting the development of strong contracts with clauses protecting your organization from liability and ensuring data privacy standards.
4
Ongoing Monitoring & Reporting
Implementing risk dashboards and reporting to provide continuous visibility into third-party relationships and evolving risks.
5
Regulatory Compliance Support
Assisting with interpreting and complying with complex regulations like DORA, GDPR, and specific industry standards.
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