An effective third-party risk management (TRPM) program allows organizations to assess potential vulnerabilities and mitigate security risks across their entire ecosystem of vendors and suppliers.
If your organization is expanding its third-party ecosystem by relying on partnerships to execute core operations, creating an effective TPRM plan is critical to regulating data risks across your growing attack surface.
The following article will help you troubleshoot your organization’s TPRM program by implementing solutions to overcome common challenges.
Learn how UpGuard Vendor Risk helps businesses overcome TPRM challenges >
Top 8 TPRM Challenges That Organizations Face
It’s normal for organizations to face challenges when implementing a third-party risk management program into their cybersecurity regimen. The exact challenges an organization will face are contingent upon the size of its third-party ecosystem, its third-party vendors' collective security posture, and the organization's internal bandwidth.
The following are the most common challenges an organization will face when implementing such a program:
- Effective ecosystem mapping
- Performing vendor due diligence and risk tiering
- Determining risk remediation prioritization with vendors
- Utilizing vendor security questionnaires
- Maintaining visibility over all vendors
- Installing continuous monitoring controls
- Implementing automation into the TPRM program
- Creating a comprehensive vendor risk management policy
Effective Ecosystem Mapping
The first challenge an organization will face when implementing a TPRM program is creating a complete map of its vendor ecosystem. This map should include an inventory of all third-party vendors the organization currently conducts business with and notable fourth-party service providers presenting potential risks to the organization.
An organization should share vendor information across all internal departments to effectively map its entire third-party ecosystem. Organizations can reconcile vendor information by identifying the stakeholders active in a third-party relationship (accounting, legal, operations, etc.) and assessing what deliverables each possesses that contain vital vendor information (spend reports, contracts, order forms, etc.).
Once the organization maps its ecosystem, it should also set onboarding procedures to add new vendors in the future. Selecting these procedures will allow the ecosystem to be easily maintained as the organization’s third-party relationships evolve.
When organizations do not map their vendors effectively, it can create blind spots in their ecosystem and lead to disorganization, lack of risk visibility, an increase in unmanaged risk, and opportunities for supply chain attacks.
Learn how UpGuard Vendor Risk empowers organizations to take control of their vendor ecosystem >
Performing Due Diligence and Risk Tiering
Another common challenge of TPRM implementation is determining what risk assessment activities are necessary to audit a vendor’s risk profile successfully. While performing due diligence, an organization can assign vendors to separate risk tiers depending on various factors, including a vendor’s proximity to sensitive data, operational importance, etc.
Risk tiers allow organizations to manage and accurately assess the level of risk a vendor presents to the organization. Organizations that don’t incorporate risk tiers into their due diligence plan will have difficulty determining if a particular vendor is safe to do business with. Organizations with many third-party partnerships will also struggle to prioritize what vendors to consider risk remediation with first.
Organizations faced with the challenges of due diligence and risk tiering can utilize a third-party vendor management tool to help appropriately assess the risk level of each vendor in their supply chain.
UpGuard Vendor Risk allows organizations to organize vendors by the level of risk they present. The comprehensive tool also will enable organizations to monitor the progress of their risk remediation workflows and schedule alerts for issues that require further attention.
Learn about the top Third-Party Risk Management solutions on the market >
Determining Risk Remediation Prioritization with Vendors
After an organization performs vendor due diligence and risk tiering, the organization must decide which vendors are worthy of risk remediation. Vendors critical to an operation will likely garner the most immediate attention.
However, the time, energy, and resources needed to pursue remediation, analyze vendor security flaws, communicate solutions, and track updates can pose significant challenges for any organization. Organizations that pursue vendor-risk software will have an easier time confronting the challenges of risk remediation and can further streamline their day-to-day business operations.
A complete vendor-risk management software, such as UpGuard Vendor Risk, will allow an organization to:
- Proactively detect third-party security risks
- Rank security risks by severity
- Request remediation from vendors
- Waive non-critical risks
- Gather security evidence, and
- Prioritize remediation across their entire supply chain
It’s important to note that high-risk vendors will likely require more intensive third-party risk management strategies. An organization’s highest risk tiers will likely require remote or onsite audits to ensure information security. In contrast, low-risk vendors may only need regulatory compliance checks to confirm low operational risk.
Utilizing Vendor Security Questionnaires
Each standard vendor assessment method (audits, penetration testing, and questionnaires) has advantages and disadvantages. Onsite audits and penetration testing require extensive resources, including time, money, and staff oversight. These circumstances leave most organizations relying on self-reported questionnaires, which are subject to bias and incentive-focused answers, for vendors with low to moderate cyber risk.
Dispatching security questionnaires across their supply chain, ensuring each vendor completes the questionnaire on time, and verifying the validity of each vendor’s answers can present significant challenges for an organization. To combat this challenge, organizations should consider outsourcing to an independent third party to dispatch and assess risk-based questionnaires to and from the organization’s vendors.
UpGuard’s comprehensive cybersecurity solution provides vendor risk assessments and allows organizations to save time by automating the questionnaire process. Utilizing UpGuard’s automated questionnaire tools, an organization can assess its vendors, streamline communications, and consistently evolve its TPRM process to cover new risks and compliance standards.
Learn more about UpGuard’s automated security questionnaire workflow and questionnaire library >
Maintaining Visibility Over All Vendors
As an organization’s vendor ecosystem grows, visibility becomes harder to maintain. This lack of visibility makes the organization vulnerable to cyber attacks, compliance issues, and other risks that may damage the organization’s reputation. Combine this with the array of government mandates and security frameworks that safeguard data privacy, and it can be challenging for organizations to ensure all vendors align with industry standards.
The easiest way for organizations to tackle this challenge is by utilizing a vendor management tool to monitor all vendors in one centralized location. UpGuard’s Vendor Risk allows businesses to analyze the compliance status of each of their vendors across their entire supply chain. UpGuard’s comprehensive cybersecurity tools also include compliance assessments that evaluate vendors against government mandates such as the GDPR, CCPA, HIPAA, PCI DSS, etc.
Additionally, with the increased visibility UpGuard provides, organizations taking an ESG (environmental, social, governance) approach to business can also assess third-party vendors using an internal growth plan or custom compliance metrics.
Implementing Continuous Monitoring
Most assessment methods in an organization’s third-party risk management process only evaluate a vendor at that current moment. This timing can open an organization to hidden security risks as assessment data becomes outdated and a vendor’s security posture changes.
To maintain an updated view of an individual vendor’s risk exposure, an organization should implement continuous monitoring processes into its TPRM program. Continuous monitoring is the process of identifying common or critical risk factors and passively monitoring these factors throughout the lifecycle of a third-party relationship.
Continuous monitoring can provide a host of benefits to organizations looking to implement a Vendor Risk Management program.
- Significantly increase incident response metrics
- Improve ongoing visibility across the vendor ecosystem
- Eliminate blind spots that can occur in between questionnaire cycles
- Provide security posture updates in real-time
Learn how UpGuard helps businesses monitor their vendors in real-time>
Automating the TPRM Program
As an organization scales and the number of third-party partnerships increases, its TPRM program becomes more challenging to maintain. Implementing automation is the best way for a business to strengthen its TPRM program.
Automating its process will allow an organization to standardize its TPRM program, mitigating unmanaged risks from new and existing vendors. Most automated TPRM tools are also equipped with strategies to alleviate other challenges included in this list, such as compliance regulation, questionnaire dispatching, and continuous monitoring.
Additional benefits of having an automated TPRM program include:
- Eliminating the need for manual tasks and tedious data entry
- Improving business continuity by streamlining TPRM procedures
- Passively enforcing regulatory requirements
- Improving risk-based decision-making by increasing visibility
- Anticipating security breaches and overall strengthening of TPRM procedures
Learn how UpGuard Vendor Risk helps businesses streamline their TPRM programs >
Creating a Comprehensive Vendor Risk Management Policy
One of the most prominent challenges organizations will face during TPRM implementation is putting all the pieces together to form a comprehensive vendor risk management policy. Without proper Vendor Risk Management, businesses will struggle to build strong vendor relationships and achieve vendor cyber maturity.
This policy should include the following:
- Vendor compliance standards
- Vendor liability in the event of a data breach
- Acceptable vendor controls for security posture and security ratings
- Response plan for risky third-party partnerships
- Response plan in the event of a third-party data breach
- Organization’s attitude towards strategic risk and other TPRM principals
- Controls for board or senior management oversight
Organizations utilizing automation and cybersecurity tools to monitor their vendors should also include how and when these tools are used and communicate what important stakeholders and contacts are involved.
How UpGuard Helps Organizations Streamline Their TPRM Programs
UpGuard’s Vendor Risk product can help organizations streamline their TPRM program by automating risk assessment workflows, providing real-time posture updates, and increasing visibility across their vendor ecosystem.
By automating their TPRM program with UpGuard, organizations can:
- Decrease time and energy spent creating, sending, and reviewing vendor questionnaires
- Monitor all vendors and the real-time risk each poses
- Assign vendors to different risk tiers to ensure robust risk assessments
- Calculate the impact of remediated risks
- Get results with instant rescans and monitor vendor’s daily
- Gain insight into what factors are impacting a vendor’s security posture
- Assess risks and request remediation in a single workflow
- Run tailor-made reports for various stakeholders using the reports library
