NEGOSENTRO.COM | Here’s What to Look for in a Third-Party Risk Management Tool | Third-party risk isn’t something you should still be managing the old-fashioned way. Analog methods of third-party risk management can leave you open to regulatory repercussions, cyber breaches, reputational damage, and more. Not to mention, those old-fashioned, manual processes cost your organization a lot of time and manpower that a software tool could save through simple automation.
So if you haven’t yet implemented a third-party risk management tool, it’s time. With the right third-party risk management tool, you can automate many workflow processes, continually monitor vendors for risk, collaborate more effectively, and cut costs. Here’s what you should look for in a software tool.
Workflow Automation and Scalability
Aside from mitigating the very real risks inherent in any third-party vendor relationship, one of the number one things most organizations look for in a third-party risk management tool is workflow automation and scalability. Scalability is important because the software needs the flexibility to reflect changes in your vendor relationships, whether that means adding an unlimited number of new relationships to the risk management equation, removing vendors from the list as they reach the end of their lifecycle with the company, or reflecting that the company’s mission and focus has changed and the vendor relationships need to change, too. Scalability means that your chosen software tool can get bigger or smaller along with your business, so to speak.
Of course, workflow automation is an important feature, and it’s one that can save your organization a lot of time on the vendor risk management front. When looking at third-party risk management software, look for one that allows for maximum automation of workflows that are tedious and time-consuming to complete manually, and don’t really require a human touch. For example, many third-party risk management software tools automate sending email reminders to vendors and creating logs of those reminders, or notifying team members in the case that a vendor’s security rating has changed or other factors have come into play.
Tools that collect vendor security ratings give you a unique look into the cyber security risk each vendor brings. Security rating features in third-party risk management tools typically make it easy to assess the level of risk vendors bring to your organization through the use of dashboards that organize vendors into tiers based on the type of data they handle and the stringency of their security protocols surrounding it. Rating tools can simplify and demystify the level of cyber security risk a given vendor represents, and can even offer continual monitoring for risk factors like cyber breaches, which affect third-party vendors at a much higher rate than those vendors seem willing to admit to the firms they provide services to.
Vendor Questionnaire Self-Reporting
Risk management software that allows for the automation of vendor questionnaire self-reporting can also save your company a lot of employee time and effort. The system itself will take care of contacting vendors with their questionnaire questions, and allow those vendors to complete the questionnaires and upload them into the database at their convenience. The data that you get back from these automated vendor questionnaires can be immediately available in the system for those who need it, like your IT department.
You never know when something will come up, or go down, at a vendor that could affect your level of third-party risk. Perhaps it’s revealed that a fourth-party vendor in your vendor’s supply chain relies on forced labor. Perhaps one of your vendors experiences a cyber security breach and doesn’t inform you. Maybe a vendor fails to maintain regulatory compliance or conduct appropriate due diligence on all of their vendors. Ongoing monitoring can apprise you of these problems and give you the chance to address them, before they create regulatory, reputational, or security issues for your organization, too.
With supply chains stretching across the globe and vendors working together across thousands of miles and international borders, you need more sophisticated third-party risk management tools than you might have used in the past. Manual processes are no longer sufficient. Choose the right third-party risk management tool for your company, and you’ll spend less time mitigating third-party risks and more time pleasing your customers.