Strengthening Risk Terms and Third Party Accountability
A critical service is down, the third party has missed its recovery target, and someone finally opens the contract looking for answers. Instead, they find phrases such as “commercially reasonable efforts” and “prompt notification.”
This is the moment when third party accountability is tested. If the contract does not define the obligation, the evidence required, or the response to failure, the organization may know that performance was unacceptable without having a clear way to compel action.
This blog looks at how practitioners can turn risk terms into usable accountability tools, with practical steps for defining expectations, assigning responsibility, verifying performance, and responding when a third party falls short.
Write Risk Terms That Can Be Leveraged
Accountability starts with language that works under pressure. A term that cannot be measured, verified, or enforced may help complete a negotiation, but it provides little leverage when the service fails.
For each material obligation, the contract should answer:
What is the third party required to do?
When must it be completed?
How will performance be measured?
What evidence must the third party provide?
What happens if the requirement is not met?
The final question is often the weakest. A contract may require a business continuity plan without requiring test results or correction of identified gaps. It may establish an incident-notification deadline without addressing repeated late notices.
A missed obligation should lead to an appropriate response. Depending on the severity, that may include increased reporting, a corrective-action plan, executive review, formal notice, contractual remedies, or transition planning. The purpose is not to make every issue punitive. It is to remove uncertainty before a problem occurs.
Focus on the Obligations That Matter Most
Trying to monitor every contract provision with the same intensity creates plenty of activity but not necessarily better oversight. Accountability should focus on the obligations that protect critical services and support meaningful risk decisions.
For higher-risk relationships, these may include:
Availability and performance thresholds
Incident notification requirements
Business continuity and disaster recovery testing
Recovery time and recovery point objectives
Security and data protection controls
Remediation deadlines
Material subcontractor changes
Transition assistance and data return
Termination rights for repeated failures
The right priorities will vary by service. A cloud provider, payment processor, call center, and records-storage company should not have identical oversight requirements. Monitoring should reflect how the service could fail and what that failure would mean for the organization.
Require Evidence, Not Reassurance
Accountability depends on evidence. A third party may state that a control is effective or that an issue has been resolved, but the organization needs enough information to evaluate that claim.
The contract should identify the evidence required for material obligations. This may include performance reports, incident notices, recovery test results, remediation records, assurance reports, subcontractor notifications, or documentation of data return and deletion.
Receiving evidence is not the same as reviewing it. Someone must determine whether the information is complete and whether it addresses the contractual requirement.
Practitioners should also compare third party reports with internal operational information. A dashboard may remain green while internal support tickets increase or transaction backlogs take longer to clear. The third party’s report is an important source, but it should not be the organization’s only view of performance.
Accountability Also Runs Inward
An organization cannot hold a third party accountable if its own responsibilities are unclear. Strong contractual rights have limited value when no one monitors them or when identified problems have nowhere to go.
For each material obligation, the organization should identify:
The business owner accountable for the service
The third party risk function responsible for oversight and challenge
The specialist responsible for evaluating the evidence
The review frequency
The escalation threshold
The governance body authorized to require action
Third party risk management has an essential role, but accountability cannot sit with that function alone. Business owners understand service performance. Technology, Cybersecurity, Privacy, Compliance, and Business Continuity teams evaluate specialized evidence. Procurement supports commercial escalation, while Legal advises on notices, remedies, amendments, and termination.
Operational resilience or enterprise risk may be positioned to connect third party performance with internal dependencies, customer impact, and the organization’s tolerance for disruption. The structure may differ among organizations. What matters is that responsibility for the complete view is assigned rather than assumed.
Act Before a Formal Breach
A formal contract breach should not be the first sign that intervention is needed. Repeated near misses, late reports, missed remediation dates, and worsening service trends can justify action before a critical threshold is crossed.
Useful escalation triggers may include:
Repeated failure or near failure of a critical Service Level Agreement (SLA)
Late or incomplete incident notification
Failure to meet recovery objectives during testing
Overdue high-severity remediation
Repeatedly late root-cause reports
Material subcontractor changes without required notice
Rising backlogs, outages, or customer complaints
Each trigger should lead to a defined response. Otherwise, escalation depends on who notices the issue and how persistent that person is. That is not a reliable control.
Practitioner Action Items
The following actions can move accountability from contract language into daily oversight:
Start with critical services. Select a manageable group of third parties that support essential operations. This directs limited resources toward relationships where weak accountability could cause the greatest harm.
Identify the obligations that matter most. Focus on commitments that affect continuity, regulatory duties, customer impact, security, or recovery. This prevents important requirements from being buried among routine commercial terms.
Test whether each obligation is usable. Confirm that it includes a timeframe, measurement method, evidence requirement, and response to failure. If the organization cannot determine whether the obligation was met, it will struggle to enforce it.
Assign an owner and reviewer. The person managing the relationship may not be qualified to evaluate security evidence or recovery testing. Match the reviewer to the obligation and document who has final accountability.
Compare external and internal evidence. Reconcile third party reports with incident records, complaints, ticket volumes, backlogs, and performance data. Differences may reveal deterioration before an SLA is missed.
Define escalation in advance. Establish when the organization will require enhanced monitoring, remediation, formal notice, or transition planning. Predefined triggers reduce delay and inconsistent treatment.
Track corrective action through closure. An accepted remediation plan is not a resolved issue. Confirm that promised actions are completed and supported by evidence.
Use failures to improve future contracts. Feed incidents, failed tests, and recurring exceptions back into contract templates and negotiation guidance. Otherwise, the same weakness may return at renewal.
Practitioner Takeaways
Third party accountability is not about creating a combative relationship. It is about making expectations usable and ensuring that both parties understand what follows when those expectations are not met.
The practical test is straightforward: Can the organization identify the obligation, evaluate the evidence, assign responsibility, and act when performance falls short?
If not, the contract may contain strong language without creating meaningful accountability.
Author Bio
Hilary Jewhurst
Sr. Membership & Education Coordinator at TPRA
Hilary Jewhurst is a seasoned expert in third party risk and risk operations, with nearly two decades of experience across financial services, fintech, and the nonprofit sector. She has built and scaled third party risk programs from the ground up, designed enterprise-wide training initiatives, and developed widely respected content that helps organizations navigate regulatory complexity with clarity and confidence.
Known for turning insight into action, Hilary’s thought leadership and educational work have become go-to resources for professionals looking to mature their TPRM programs. She regularly publishes articles, frameworks, and practical guides that break down complicated risk topics into meaningful, accessible strategies.
Hilary recently joined the Third Party Risk Association (TPRA) as a staff member, supporting industry-wide education, peer learning, and advancing best practices. She is also the founder of TPRM Success, a boutique consultancy that helps organizations strengthen their third party risk management capabilities through targeted training, tools, and strategic guidance.
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