Prasad Sabbineni, the Co-Chief Executive Officer at MetricStream, emphasizes the importance of third-party risk management in today’s business environment characterized by geopolitical tensions, supply chain disruptions, and strict regulations. Organizations now rely on interconnected ecosystems involving various third parties, which can expose them to operational, compliance, cybersecurity, and strategic risks.
In a Deloitte survey, 63% of respondents highlighted the need to revisit and refresh their third-party risk management methodologies. To effectively manage third-party risks, organizations must consider key factors such as aligning the program with strategic objectives, integrating risk and compliance oversight into existing GRC programs, and adopting a connected approach to understand the impact of various risks and relationships.
Third-party risk management should be a collective responsibility that involves all levels of an organization, not just limited to CISOs and GRC teams. Employee awareness of third-party risks, along with clear roles, responsibilities, and accountabilities, is crucial for effective risk management. Additionally, establishing well-defined policies, SLAs, and NDAs can help set the scope of third-party relationships and ensure continuous assessment of risks and compliance.
By aligning the third-party risk strategy with organizational goals and integrating it into the enterprise risk management program, organizations can gain accurate insights into risk exposure and make informed business decisions. Creating a common risk language is essential for aggregating risk data from various business units and departments to enhance risk visibility and decision-making at the organizational level.
To combat modern-day risks, organizations can leverage technologies like machine learning, generative AI, and predictive analytics to automate GRC processes and derive actionable insights. Real-time security scanning and AI-powered solutions can help assess the security posture of third parties and identify anomalies in regulatory reports, such as SOC 1 and 2. Overall, a connected and continuous approach to third-party risk management, supported by technology and automation, is crucial for effective oversight and business resilience.
Participating in the Forbes Business Council can provide growth opportunities and networking for business owners and leaders. Organizations looking to enhance their third-party risk management programs should prioritize clear processes, policies, due diligence, contracts, risk assessment, monitoring, and mitigation to ensure business resilience in today’s challenging business landscape.
