In the world of business, a lot of it is instinct. This goes from making a first impression (or having a first impression made on you by a potential client) all the way to being able to make decisions about what’s best for your business going forward.
However, as much as humans like to walk the walk when it comes to instinct or gut feelings related to business, people often get it wrong! So, it’s important to have backup plans in place when you’re engaging with some of the riskier areas of business operations.
This article will guide you through one of the areas that growing businesses need to know a lot about — third-party risk management.
So, read on to learn more.
What Is Third-Party Risk Management?
In simple terms, third-party risk management is a process that all businesses must implement to identify, assess, and mitigate risks that may come from their interactions with other businesses. These can include external vendors, contractors, partners, or other service providers, as well as any teams that you’re looking to merge with.
Remember, when you merge with another company, they’ll have access to sensitive data and will likely be performing essential services for you, as well as being involved in key business processes. So, you need to proactively manage the risks associated with these relationships, which can be done with the help of computerised programs and software from websites like www.surecloud.com.
So, leading on from this, how do you build a reliable third-party management system?
Software Can Help
As mentioned before, there are many kinds of software that can help you to develop a pretty watertight third-party management system, with one of the most well-known being Government, Risk & Compliance (GRC) software. This can help to identify potential risks of third parties, as well as run what is effectively a background check on them before you sign on the dotted line. These background checks will explore their industry compliance, their previous business activity, and even their credit score to ensure that you’re only making deals with the best people in the business.
Make Some Lists
You will also need to list all the third parties that have access to your sensitive data or the third parties who will provide essential services. This will help you to create a shortlist if there’s an issue with a data breach at any time. For security reasons, many businesses keep this information in a handwritten ledger or folder that isn’t accessible online.
Assess Risk
When working with a new company, you should evaluate them based on factors like their own security controls, their financial stability, their compliance with the relevant regulations for your industry and theirs, and their past performance. You should then be able to define acceptable risk levels for the different types of third-party relationships that you have, based on their criticality to your business itself. So, you may need to perform a thorough due diligence process, which will include performing background checks and reference inquiries from their other business partners or clients.
Monitor Them
It sounds paranoid, but you’ll need to keep an eye on any third parties. This will involve looking at your business accounts after you have started doing business with them, as well as assessing the data that they have. Does your business email address suddenly have many spam emails coming to it? This can suggest that they may have sold your data, which is obviously, not a good sign.
If you suspect an issue, terminate your legal contracts immediately and seek legal advice.
