Advocating for a larger budget is a common need for most security professionals. With so many business obligations fighting for priority and funding, even vital concerns like Vendor Risk Management can fall through the cracks. However, third-party cyber risks can devastate businesses in the blink of an eye—meaning maintaining a proper third-party risk management program should be at the top of your priority list.
Unfortunately, company executives may not understand or be willing to allocate budget dollars to invest in a TPRM program. ROI concerns, lack of resources, and reliance on existing security controls are just some of the arguments you might encounter while trying to make a case for an increased TPRM budget.
Don’t worry if you initially encounter resistance. With proper preparation, you can advocate for why your specific business can and should invest in third-party risk management, setting your organization up for success and security in the long term.
How to Communicate Third-Party Risk to the Board
Download this eBook to learn how to communicate TPR to the board.
Why third-party risk management should be a priority for executives
Business executives often balance many different spinning plates across their organizations, and third-party risk management is not typically one of them. Instead, that concern is delegated to CISOs and security teams. Still, TPRM should be a priority for executives because it can deeply affect an organization as a whole due to both an evolving risk landscape and growing business impacts.
Evolving risk landscape
Third-party risk landscapes are continuing to grow, and businesses should understand their unique TPRM risk landscape and what it includes. TPRM typically emphasizes mitigating cybersecurity risks, but it has evolved to include other categories of inherent risks:
- Financial risks
- Reputational risks
- Regulatory and compliance risks
- Supply chain and service provider disruption risks
- Business continuity risks
- Data breach risks
- Operational risks
- Third-party vendor risks
- Information security risks
The sum of all these risks is your organization's unique third-party risk landscape. These risks have the potential to impact business operations negatively, but they can be mitigated through proper third-party risk management.
Growing business impact
Vendor-related security incidents, even if they seem minimal, have the potential to deal maximum damage to your organization. Third-party data breaches result in financial losses, reputational damage, and—depending on the nature of the breach—regulatory penalties for hundreds of thousands of dollars. Examples of this impact include:
- 2023 MOVEit file transfer breach: A zero-day vulnerability in Progress Software’s MOVEit file transfer software was exploited by the Clop ransomware group. Multiple government agencies (including the U.S. Department of Energy), banks, insurance firms, universities, and more were all affected and had sensitive data leaked.
- 2020 SolarWinds supply chain attack: Russian-linked hackers compromised SolarWinds’ Orion software, which was used by banks, government agencies, and Fortune 500 companies for IT monitoring. Over 18,000 organizations unknowingly downloaded the compromised software update—allowing hackers to infiltrate their networks.
- 2013 Target data breach: Hackers gained access to Target’s network through a third-party HVAC vendor with weak security controls, stealing 40 million credit card numbers and 70 million customer records. Due to the size and nature of the data breach, Target paid out a settlement of $18.5 million and faced lasting reputational damage.
Proper third-party risk management can help mitigate these types of situations, making TPRM not just a cybersecurity function but a business imperative.
How to convince executives to prioritize third-party risk management
Security professionals understand the importance of third-party risk management but remember executives don’t live in the same bubble. While security professionals are inundated with stories about the latest data breach or security vulnerability, these events are not typically included in the news briefs CEOs are reading.
To combat this gap, consider a few strategies for convincing executives that investing in TPRM is beneficial and important to your organization.
Speak their language
Frame third-party risk management as a risk-reduction strategy rather than another security program. Reducing risk is an executive priority your C-Suite may resonate with, especially if that risk reduction protects organizational compliance, reputation, and revenue.
Consider using data to help bolster the need for proper TPRM software. Data-driven insights showcase how significant the impact of third-party breaches can be. Take it a step further and isolate data relevant to your industry—such as the cost of data breaches for healthcare industries or non-compliance fines for financial institutions.
Align with strategic goals
Business executives often handle strategy and long-term company forecasts. Aligning the need for third-party risk management programs with upcoming strategic goals helps your executives understand why TPRM investment is warranted. For example, if your company is expanding partnerships or adopting artificial intelligence models, highlight the increased third-party exposure that comes with those decisions.
Regulatory compliance is another common concern for stakeholders, and luckily, there is a very clear connection between TPRM and regulatory compliance. Standard and industry-specific regulations, like GDPR, HIPPA, or DORA, and security frameworks, like NIST or CIS Controls, all include elements of Vendor Risk Management. Draw a clear connection between TPRM investment and regulatory compliance, and showcase how one helps the other.
Leverage real-world examples
Finally, utilize existing case studies of similar companies that invested in TPRM solutions and the results they achieved. Tailor these examples to your industry, the specific TPRM product you’re interested in, or your company's strategic goals.
For example, Morningstar, a US-based global financial services firm, utilized UpGuard Vendor Risk to optimize its vendor security assessment process, moving from an unstructured manual process to an automated TPRM solution. This investment resulted in increased vendor assessments by over 1,300% and 75% of time saved assessing vendors.
St John Western Australia, a non-profit organization providing essential healthcare services, struggled with safeguarding patient data and protecting health information with its existing manual processes. After implementing UpGuard Vendor Risk, St John saved around 2,000 hours of assessment time—equivalent to two personnel per year.
How to Communicate Third-Party Risk to the Board
Download this eBook to learn how to communicate TPR to the board.
Tips to earn budget approvals for third-party risk management tools
Once executives understand the priority of third-party risk management, the next step is to demonstrate how these tools improve your organization and a plan for implementation. Consider the following tips to help bolster your case for a larger budget to accommodate third-party risk management tools.
Calculate the ROI of TPRM investments
One of the best ways to strengthen your case for TPRM investments is to showcase the return on investment (ROI). Consider utilizing IBM’s annual Cost of a Data Breach Report, which in 2024 revealed that the global average cost of a data breach was USD 4.88M—a 10% increase over the previous year and the highest total ever. Calculate your organization's ROI by comparing the cost of a third-party data breach against the cost of TPRM investment.
Include other metrics, like incident response costs, downtime, regulatory fines, or third-party relationships, that are positively impacted through TPRM adoption.
Demonstrate efficiency gains
Third-party risk management solutions typically include efficiency features, saving security and compliance teams time and resources. Automated security questionnaires and third-party risk assessments, streamlined procurement and onboarding workflows, and compliance requirement checklists are a few examples.
As you present your business case for a larger TPRM budget, emphasize how TPRM prioritization helps your team increase efficiency and streamline manual work. These examples illustrate how third-party risk management can enhance overall business operations while increasing your organization’s security posture at the same time.
Pilot programs and create phased rollouts
TPRM integration is daunting, so come prepared with pilot programs or a phased roll-out plan. Propose an initial low-cost deployment to prove value before requesting a larger budget, demonstrating the value of third-party risk management with a small group of vendors to create quick wins.
Ideally, focus on vendors with the highest risk exposure to your organization. With one or two high-risk vendors, provide an overview of the entire risk management process, demonstrating how vendor risk assessments, risk profiles, and remediation functions help address security concerns for your organization. By starting the Vendor Risk Management strategy on a small scale, you can easily showcase value and persuade executives to consider the same due diligence on a larger scale.
How to address common executive objections to TPRM investments
It’s more than likely you’ll run into objections or concerns when asking for a larger security budget—especially for third-party risk management solutions. Here are some common executive objections and how to best address them. Remember to tailor each answer to your specific workplace and business goals.
“We already have security controls in place.”
Explain why existing security controls, like continuous monitoring and data privacy practices within your organization, don’t extend to third parties—and why that’s a major blind spot. Connect the dots between a security incident at a third-party vendor back to your organization, revealing how what impacts them can also impact you.
“What’s the ROI of investing in TPRM?”
Reference cost savings from proactive risk management, emphasizing how financially devasting a third-party data breach can be. Utilize resources like IBM’s annual Cost of a Data Breach Report and recent incidents from your specific industry that might persuade executives to see the benefit of third-party risk management initiatives.
“We don’t have the resources to manage this.”
Highlight how modern TPRM tools automate risk assessments and reporting, reducing manual workload. You can also compare TPRM tools, which are typically automated, to hiring additional third-party risk management personnel—which consumes financial resources and valuable time.
“This isn’t a priority right now.”
Third-party data breaches are not a matter of if but when. The potential risk of a data breach related to a vendor is always present. Third-party risk management also applies to regulatory compliance —which should always be a priority. Tie TPRM to regulatory trends in your industry and show how non-compliance risks would affect your organization.
Take control of your third-party risk management with UpGuard Vendor Risk
Executive buy-in is a difficult but necessary step toward securing your organization from third-party cyber risks. Security leaders should take action before a third-party data breach forces urgent investment—after all, being prepared is paramount in cybersecurity.
UpGuard Vendor Risk addresses common executive concerns by:
- Providing automated risk assessments to reduce manual workload.
- Offering real-time risk intelligence to make security decisions faster.
- Demonstrating quick ROI through faster vendor evaluations and compliance assurance.
- Enabling scalability so companies can grow their vendor ecosystem without increasing security risks.
Visit https://www.upguard.com/contact-sales to learn more about how UpGuard Vendor Risk can enhance your third-party risk management.
