Best practices for successfully managing third-party risk:
- Invest Time in Foundational Elements
Too often, when organizations set out to assess vendors, they rush into developing a questionnaire and initiate tests without having created the framework for doing so. It’s far essential that the foundational elements of a successful program — policies, procedures, a complete vendor inventory, and an appropriate way of contracting — are well-established. in order to do that, the right stakeholders need to be involved. Vendors are the partners of the business unit and need to be treated as a consequence by the group that conducts risk tests. Vendors have to be comfortable with the process, understand what has to be done, and help to determine what happens when controls aren’t found to be in place.
- Look at It as a Lifecycle
Organizations sometimes develop inaccurate expectations about the scope of third-party risk initiatives. Develop your program to make sure that you address the entire lifecycle of your vendor relationships — from selection, to onboarding, to management totermination — and carefully evaluate the cost and effort involved in each step.
- Engage in Vendor Prioritization
It is critical to have a current vendor list that includes the services they provide, the data they access, and the criticality of their services (from an availability standpoint). Which vendors you need to assess, and what you need to ask them depends on who they are, and what they do for you. Vendor risk framing starts by assigning a risk rating to the type of service being provided. Start with the risk that is inherent with outsourcing that function. Consider that risk and the security and data protection requirements that need to be placed on any company that’s going to provide that service. That is the inherent risk calculation that will help to place them in the right risk categories.
- Get the Contracting Right
A vendor contract is the playbook that details what you can do throughout the relationship. Alignment and synergy need to exist between the contracting process and the people who understand and can define what the risk requirements need to be for that type of service. Whomever is responsible for the contract (Legal, Procurement etc.) should be aware of the provisions required to address the risks associated with a vendor. All contracts are not equal; vendors need to be held to different accountability standards based on what they are providing.
- Assess Your Maturity
Evaluating the maturity of your program is essential. One area may be more evolved than another. For example, if you’re in a regulated industry such as financial services, the part of your program that is subject to regulatory requirements needs to be more mature than it would be if you were in an unregulated industry. Assess the maturity of the different pieces of your program and decide which of them need attention.
- Look at Reporting from the Top Down
Don’t start the reporting process by trying to figure out what data you need to gather. Start by considering all of the reports you have to deliver and who you need to deliver them to. Then you can easily work backward to determine what data you need. There are two central areas to report on — risk and operational effectiveness.
Feel free to contact E-SPIN for the solution for your system and operation to reduce risk of your businesses and organization. We can secure and protect your businesses with our various software security technology.