Operational Resilience

TPRM

What is TPRM?

TPRM is the ongoing process of identification, assessment, management and mitigation of risks associated with third-party entities (vendors, suppliers, service providers, or partners). It covers a broad spectrum of risks, such as:

  • Operational Risk: Disruption to your operations due to the failure of a third-party (e.g., outages, data breaches).
  • Reputational Risk: Negative publicity caused by the unethical or illegal actions of a third-party.
  • Financial Risk: Financial impact of a third-party failure or breach of agreement.
  • Compliance Risk: Inadequate attention to third-parties leads to compliance failures.

Key Components of a TPRM Program

Third-Party Inventory

  • Discovery: Identify ALL third-party entities, not just obvious vendors. Also include consultants, software providers, and any third-parties with access to sensitive data.
  • Classification & Tiering: Assign third-party entities a risk level (e.g., high, medium, low), based on criteria such as type of data accessed, criticality of service provided, or location.
  •  

Risk Assessment

  • Tailored Questionnaires: Develop specific questionnaires to assess third-party security, compliance, business continuity planning, and financial stability.
  • On-Site Assessments: For very high-risk vendors, consider visiting their locations to assess physical security and operational control implementation.
  • External Data: Use third-party threat intelligence feeds and security rating services in addition to your own assessment.

Due Diligence

  • Financial Health: Review financial statements to assess the financial health of critical third-parties.
  • Reputation Screening: Conduct investigation of potential third-parties for ethical or legal violations or negative press.
  • Certifications & Standards: Ensure the vendor has, or adheres to, the necessary industry certifications (e.g., SOC 2, ISO 27001).
  •  

Contractual Safeguards:

  • Data Security & Privacy: Ensure the protection of your data and define breach notification responsibilities.
  • Service Level Agreements (SLAs): Define service level expectations, uptime commitments, and penalties for under-performance.
  • Termination & Offboarding: Describe the process for secure data destruction or return upon 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 external vendors for almost every service, from IT to supply chain logistics. This reliance exposes organizations to inherent risk that must be managed.
  • Regulatory Requirements: Regulations such as DORA, GDPR, CCPA mandate companies to be responsible for risks posed by their third-parties.
  • Protect your Organization: Effective TPRM protects your business operations, reputation, and financial health from the consequences of third-party issues.
  • Build Trust: Strong TPRM demonstrates to customers and stakeholders the due diligence your organization undertakes.

WHO DOES IT IMPACT?

Asset Managers
Banks
Fintechs

Implementing a succesful TPRM Program

1

TPRM Strategy & Roadmap

Helping organizations establish a comprehensive TPRM framework, including risk assessment methodologies, governance models, technology selection, and ensuring operational resilience.

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.

Want to hire 

Regulation Expert? 

Book a call with our experts

Hire US