Inherent Risk
Conduct Inherent Risk Assessments for Your Third Parties
Inherent risk is a foundational calculation for your TPRM program. Get it right with ProcessUnity’s workflow and data solutions.
Inherent Risk is Critical for Third-Party Risk Management
Inherent risk is the most important calculation in your Third-Party Risk Management (TPRM) program. It’s the score that allows you to evaluate and understand the level of risk associated with each of your external service providers. Get it right, and you can effectively prioritize resources, allocate efforts, and implement appropriate risk mitigation strategies. Get it wrong, and you might miss important risk indicators.
By finetuning your approach to inherent risk, your team can strategically manage its third-party relationships, strengthen risk management practices, and maintain a resilient and secure operation.
Whitepaper
Quantify and Manage Inherent Risk for Third Parties
ProcessUnity: Three Methods to Score Inherent Risk
ProcessUnity offers three ways to help your team score your third parties based on inherent risk, and quickly assign them to a criticality tier based on their importance to your ongoing business operations, and the risk they pose to your business.
The Inherent Risk Questionnaire
An Inherent Risk Questionnaire is an important tool to understand how critical each vendor is to your business operations and the amount of risk they pose. Available in the ProcessUnity TPRM Platform, our inherent risk evaluation process establishes a standard intake questionnaire that becomes part of your vendor request and onboarding process.
The person or department requesting to integrate a new vendor answers a series of questions related to the service to be onboarded, including the importance of the vendor to ongoing business operations and the nature of the data being shared. The inherent risk score, and resulting tier placement, informs the scope and frequency of pre- and post-contract due diligence.
Auto Inherent Risk
If you’re behind on your inherent risk scoring, or you don’t have an inherent risk process in place, consider employing Auto Inherent Risk capabilities available in ProcessUnity’s Global Risk Exchange. Upload your vendor portfolio to the Exchange and determine inherent risk for each of your third parties based on how our other customers previously rated the same vendors. If companies similar to yours are working with one of your third parties, it’s highly likely they would rate the inherent risk of that third party similarly. For example, most companies would consider a cloud storage provider that hosts sensitive data to be Critical- or High-Risk.
We then aggregate the scores for each of your service providers and instantly provide a base inherent risk score for your network, resulting in an efficient risk-ranking for your entire vendor ecosystem.
Inherent Risk Questionnaire + Auto Inherent Risk Combination
You can merge the Inherent Risk Questionnaire and Auto Inherent Risk for a highly efficient evaluation of your portfolio. This combination of internally attested and externally validated data helps determine the inherent risk of each vendor. For example, if your internal risk score doesn’t align with the score from the Exchange, your team can dig deeper to determine the delta.
By comparing and confirming risk scores, your team avoids wasting time on over-assessing lower-risk third parties and under-assessing more critical providers. It’s an extra layer of assurance with ProcessUnity’s end-to-end TPRM solution. No matter your approach, ProcessUnity helps you rank each vendor and determine appropriate assessment scope and frequency, empowering you to effectively categorize your entire vendor ecosystem.
Our Platform Solutions
Automate the complete third-party risk lifecycle, from initial onboarding to ongoing monitoring, with the industry’s most configurable workflow platform.
Learn MoreAccess the industry’s most extensive network of pre-validated vendor assessments and real-time risk intelligence. Our exchange platform enables organizations to make faster, more informed decisions using shared risk data, eliminating redundant assessments and providing deeper insights into potential vulnerabilities across your vendor ecosystem.
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Frequently Asked Questions
Inherent risk is the potential threat a third party poses to your organization at their current state, based on their level of access to data and impact on your business operations if a threat were to occur. For example, a third party with weak security may pose minimal inherent risk if they have limited data access and business criticality, whereas a critical vendor to business operations (like your company email provider) would severely impact your business if breached, making them inherently risky.
An inherent risk assessment evaluates the level of risk in a third-party relationship based on business criticality and a third party’s security controls, helping you identify high-risk third parties and prioritize due diligence and questionnaire efforts.
An inherent risk questionnaire is a structured set of questions used to evaluate a third party’s criticality and the potential risk they introduce. The results drive third-party tiering based on inherent risk levels, guiding targeted due diligence efforts.
A third-party’s inherent risk score quantifies their baseline risk level prior to integration with your business, based on the likelihood and potential impact of multiple risk factors. TPRM tools like ProcessUnity calculate this automatically, using trained AI models to guide efficient vendor tiering and resource prioritization.