5 Areas to Mitigate Risk in Your Third-Party Relationships

5 Areas to Mitigate Risk in Your Third-Party Relationships

If you work within a Vendor Risk Management (VRM) team, you know that third-party risk can emerge at any stage of the vendor lifecycle. However, there are a few key areas where you can drive high-impact mitigation efforts to minimize risk more efficiently.  

Focusing on the 5 areas outlined below will improve your visibility into risk, allowing your team to better prioritize issues as they emerge. You’ll get a quick look at the key processes in these areas and how ProcessUnity can help you streamline them. 

For a deep-dive into the end-to-end VRM lifecycle, download ProcessUnity’s E-Book, The Complete Guide to the Vendor Risk Management Lifecycle. 

  1. Sourcing & Vendor Onboarding: A request has been made for a new outsourced service – now it’s time to get the right vendor for the job. Vendor onboarding is the initial process of vetting a third party prior to entering a contractual relationship. This is your opportunity to evaluate if the vendor fits into your organization’s risk appetite. It includes:  
    • Conducting pre-contract due diligence with relevant risk assessment questionnaires 
    • Determining vendor criticality levels to ensure that high-priority vendors receive appropriate vetting  
    • Screening for potential service overlap; alerting requestors to existing vendor relationships within a given category. 

    How ProcessUnity Helps: ProcessUnity VRM automatically determines vendor criticality and confidentiality risk levels based on company-defined criteria with targeted vendor risk assessments. During the onboarding process, ProcessUnity replaces manual tasks with a consistent, reliable workflow for bringing on more vendors, more efficiently.  

  2. Inherent Risk Scoring & Vendor Classification: Once you decide to bring on a new vendor, you’ll need to categorize them based on risk within your vendor database to monitor them adequately. This means assigning them with an inherent risk score that captures the level of risk they pose prior to the organization’s mitigating controls. One way to set a foundation for success during this stage is to establish clearly defined, agreed-upon scoring criteria. That way, vendors are consistently and appropriately monitored in line with company policy. Inherent risk scoring and vendor classification includes: 
    • Identifying the criticality of the vendor’s service to the organization’s business continuity  
    • Identifying the data and applications a third party can access  
    • Assigning inherent risk scores based on the criteria established by the organization 

    How ProcessUnity Helps: ProcessUnity VRM has built-in, standardized questionnaires that are mapped to a pre-defined number of points that translates to a risk score. The system automatically sorts vendors into criticality tiers, ensuring that each vendor is monitored at the appropriate level. 

  3. Vendor Due Diligence & Ongoing Monitoring: After conducting due diligence, a vendor’s risk profile can change at any time throughout the course of your relationship. Think of due diligence as a point-in-time picture of risk – it’s important to conduct periodic reviews of your vendors to proactively mitigate risk. That’s where ongoing monitoring comes in. Ongoing monitoring and regular due diligence go beyond a point in time assessment to provide a complete picture of vendor risk. Developing a regular cadence for monitoring vendors at the appropriate level allows you to stay ahead of issues. Vendor due diligence and ongoing monitoring include:  
    • Determining the depth and scope of vendor risk assessments using a vendor’s inherent risk score 
    • Assessing vendors with targeted questionnaires to produce specific, actionable data points  
    • Validating that a vendor’s controls are maintained throughout the duration of the relationship  

    How ProcessUnity Helps: ProcessUnity VRM supports due diligence processes with robust, auto-scoping intelligence for vendor questionnaires. The system helps you create questions that lead to precise data points while evaluating risk based on company policy. Additionally, ProcessUnity Vendor Intelligence Suite seamlessly integrates external content (cybersecurity ratings, financial ratings, sustainability ratings and more) into due diligence processes to accelerate reviews and facilitate continuous monitoring.  

  4. Vendor Contract Management & SLA Tracking: Monitoring your vendor’s performance throughout the relationship is necessary to ensure that they are adhering to contractual guidelines. The contract management and SLA tracking stage is all about understanding progress on key goals and metrics. Aligning on these metrics with all stakeholders and third parties prior to contract signing will help expedite the review process.  Vendor Contract Management & SLA Tracking includes:  
    • Reviewing vendor contracts on schedule with the right personnel  
    • Consolidating information to record and monitor contract value, signatures and contract state 
    • Creating a centralized repository with consolidated information about contracts and key deadlines 

    How ProcessUnity Helps: ProcessUnity VRM provides a common platform with role-based access to allow all stakeholders to collaborate on SLAs. The platform allows teams to document SLAs, set threshold terms and alerts and create trend reports.  

  5. Vendor Issue Management: Your organization’s risk can never be zero. Incidents are an inevitable aspect of outsourcing a third-party service, but with the right processes, your organization can anticipate these risks. Vendor issue management is the process of tracking and remediating these issues to protect the organization from operational, financial and reputational damage. Vendor Issue Management includes:  
    • Flagging vendor responses that indicate a vulnerability in the third party’s security posture 
    • Collaborating with the risk internal owners to address vendor issues in a timely and efficient manner  
    • Tracking vendor issues over a period of time to stay ahead of incidents before they occur 

    How ProcessUnity Helps: ProcessUnity VRM automatically flags non-preferred responses in vendor assessments to help teams respond to the issue immediately. The solution allows internal owners to collaborate on remediation projects by delegating responsibilities to the appropriate responders, inviting vendors to submit documentation, track progress on actions and producing trend reports over time. 

Expert Guide: Your Complete Guide to the Vendor Risk Management Lifecycle 

For an in-depth look at each stage of the vendor risk management lifecycle, download ProcessUnity’s E-Book “The Complete Guide to the Vendor Risk Management Lifecycle.” You’ll gain best practices for each stage to help your organization better manage its third-party risk as it onboards more suppliers.