When a vendor relationship ends, the risk doesn’t.  Too often, vendor offboarding is treated as an afterthought, left to chance, split between departments, or buried in a never-used checklist. The problem? An incomplete or inconsistent termination process exposes your organization to some of the highest risks in the TPRM lifecycle.   These risks include, but are not limited to, access that was never revoked, assets that were never returned, and/or data that was never deleted.  The good news: these risks are avoidable, and automation can help.  Why Offboarding Matters More Than You Think  In many organizations, onboarding gets all the attention, due diligence, approvals, kickoff meetings, and security reviews.  But what about the end of the relationship?  "You wouldn’t let an employee walk out the door without collecting their badge and shutting off system access. Why do we do it with vendors?"   Poor offboarding can lead to:  Lingering system access and potential unauthorized activity  Unreturned data or devices , especially in hybrid/cloud environments  No formal record of what actions were completed or by whom  Compliance gaps if data disposal or security controls were contractual  The Automation Opportunity  Here’s where automation can drastically improve vendor offboarding, making it faster, repeatable, and auditable.  1. Triggering the Offboarding Workflow Automatically  When a contract is marked as terminated or not renewed, the system will kick off automated offboarding activities.  It can route these activities to IT, InfoSec, Procurement, and TPRM automatically.  Tool tip: Use a trigger from your TPRM tool, GRC system, or contract lifecycle platform to launch this sequence.    2. Auto-Assigning Offboarding Tasks  Such offboarding tasks can include, but are not limited to:  Revoking system access and credentials  Collecting physical or virtual assets  Confirming data destruction or secure transfer  Archiving vendor risk files and workpapers  Tool tip:  Use tools like ServiceNow, Jira, or Monday.com to assign tasks and track completion status in real time.    3. Generating & Storing Offboarding Evidence  The system can require documentation uploads or confirmations (e.g., screenshot of deprovisioned access, destruction certificates) of completed offboarding tasks  It can also store all evidence in the third party profile for audit purposes  Tool tip:  Attach offboarding steps to a third party profile in your TPRM platform or centralize storage in a secure SharePoint folder.    4. Post-Termination Reviews  Set up a short internal review form to capture any final third party risks or lessons learned.  Optionally trigger a survey to business owners to assess third party performance.  Update the third party’s profile to note if the third party can be used again or if it is recommended to not do business with the third party.  Tool tip: Use Microsoft Forms or Google Forms and auto-send based on the third party status change.  Real-World Example: Offboarding Automation at a Global Fintech  A fintech company with over 1,200 third parties discovered that more than 30% of “inactive” third parties still had some form of residual access, including access to shared cloud folders and legacy single sign-on (SSO) profiles.  The organization then implemented a third party offboarding checklist built into their TPRM platform, which auto-triggered when a contract end date was reached or when a business owner marked a third party as "no longer in use."  Each task, such as deprovisioning access, collecting assets, confirming data deletion, was auto-assigned to pertinent stakeholders with deadlines and owner accountability.  Results in the first 6 months:   Reduced open-access risk by 78%  100% of offboarding steps documented and accessible for audits  Gained stronger alignment between TPRM, InfoSec, and Procurement  Getting Started: Questions to Ask  Do we have a standard offboarding checklist for third parties?  Who owns each task, and how do we know the tasks were completed?  Can we identify all third parties with system access that may still be active post-contract?  Do we store evidence of data destruction or handover?    Quick Win to Try  Start by creating a centralized third party offboarding checklist with due dates and owner fields. Even if you use Excel or a Google Form at first, link this to third party termination triggers and build consistency from there.  Then, explore how your existing tools (TPRM platform, ticketing system, workflow automation) can formalize and automate the process.    For additional information on the third party Termination process, view TPRA’s TPRM 101 Guidebook.   Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy  joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third party relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

In today’s increasingly interconnected enterprise landscape, third-party vendors are no longer just peripheral—they are central to how organizations operate, deliver value, and respond to change. Despite their critical role, many companies lack a clear understanding of how these external relationships align with strategic goals, operational dependencies, and risk tolerance. This lack of visibility can leave organizations vulnerable to disruption, inefficiency, and unmanaged risks. One of the most effective tools for closing this gap is the business capability map—a structured representation of what the business does to create value. When enriched with vendor, contract, and procurement data, this map shifts from a planning artifact into a strategic framework for enterprise resilience.  A business capability map outlines the core functions of an organization independently of its structure, technology, or processes. It offers a stable view of what the business can do—such as “Customer Onboarding,” “Revenue Management,” or “Supply Chain Visibility”—regardless of how those capabilities are currently implemented. This abstraction is powerful because it enables leaders to focus on what the business needs to accomplish, rather than how it does it. When third-party vendors are mapped to the capabilities they support, the organization gains a clear, contextual understanding of external dependencies. This mapping shows which vendors are connected to specific business functions, identifies redundancies or gaps, and illustrates how vendor relationships affect operational resilience.  The value of this approach becomes especially clear when viewed through the lens of risk awareness and resilience analysis. For example, if a single vendor supports a mission-critical capability like “Data Protection,” the organization may face a concentration risk. Conversely, if multiple vendors support the same capability without a strategic reason, it could indicate vendor sprawl—an inefficiency that can weaken accountability and add complexity. By visualizing these relationships, organizations can identify where intentional redundancy is necessary for resilience and where consolidation could lower risk and cost.  This capability-vendor mapping also supports more strategic decision-making. Leaders can pose targeted questions such as: Are high-risk vendors supporting high-value or mission-critical functions? Are there capabilities without vendor support, indicating over-reliance on internal resources or potential single points of failure? Do current contracts and procurement strategies align with the organization’s future capability roadmap and resilience objectives? These questions help shift the focus from reactive vendor management to proactive resilience planning.  The advantages of this approach are clear. For example, during a vendor outage or cybersecurity incident, the capability map helps teams quickly determine which business functions are affected and prioritize response efforts. During periods of organizational change—such as mergers, acquisitions, or digital transformation—the map offers a stable reference point for evaluating vendor dependencies and maintaining continuity. Procurement teams can use the map to negotiate contracts that include resilience clauses, like service-level guarantees, disaster recovery provisions, and data portability. Business owners gain clarity on which capabilities are externally supported and can plan accordingly for performance, continuity, and scalability.  Building and maintaining this resilience-focused capability map requires collaboration among several key roles. Third-party risk managers contribute insights into vendor criticality, exposure, and compliance. Business owners provide operational context and performance expectations. Procurement teams align sourcing strategies with business priorities and resilience objectives. And business architects ensure the capability framework remains accurate, relevant, and adaptable to future needs. Together, these stakeholders create a shared understanding of how external relationships support the business—and how those relationships can be optimized for resilience.  Ultimately, mapping third-party vendors to business capabilities is more than just a technical task—it’s a strategic necessity. It enables organizations to manage complexity confidently, reduce risk, and build a more resilient enterprise. By defining ownership, dependencies, and risks across the capability landscape, businesses can make better decisions, respond more effectively to disruptions, and ensure that external partnerships support long-term strategic objectives.  Author Bio Keith Stouder VP, Data Privacy and Protection Keith Stouder is an experienced executive with over 30 years of experience in enterprise architecture, data privacy, and security. He began his career in state procurement, where he handled complex technical RFPs, and has established a notable record in third-party risk management (TPRM), successfully launching two TPRM programs and developing two others. Keith consistently takes a strategic and practical approach to balancing risk with business value. He currently serves as Vice President of Data Privacy and Protection at ACT, Inc. , where he leads a cross-functional, innovative team focused on using automation and AI to enhance third-party due diligence and streamline the vendor approval process. Keith ensures that vendor value is delivered throughout the contract lifecycle—managing vendors both individually and as part of the broader enterprise portfolio. Through strategic oversight of vendors and applications, he aligns portfolio management with business goals to maximize operational and financial impact.

Most TPRM programs start risk management after the contract is signed, or worse, after the third party is already active.  But by that point, you're already behind.  The best TPRM teams are shifting left, embedding automation into the intake and triage process to capture the right information, assign the right risk level, and route the right review at the very start.   Done right, intake automation helps you:  Stop sending redundant questions to the third party  Avoid missed high-risk third parties  Improve turnaround time  Make procurement and business units your partners, not your adversaries  The Intake Problem   Manual third party intake often looks like this:  Business user of the third party product/service emails TPRM team: “Can we use this third party?”  TPRM team asks for a basic description of products/services that will be offered  A general questionnaire is sent (regardless of third party type or data sensitivity)  Multiple follow-ups and clarifications are performed  Everyone’s frustrated  This is inefficient and does not take into account a risk-based approach. Low-risk third parties get over-scrutinized, and high-risk third parties may slip through the cracks.  What You Can Automate   Let’s look at how automation can transform intake into a structured, repeatable process that gathers key risk insights and triggers the right next steps, without creating bottlenecks.   1. Smart Intake Forms  Use an online form (e.g., in your GRC, TPRM platform, or tool like Microsoft Forms) that business users fill out   before  engaging with a third party.  Questions to include:  What services will the third party provide?  Will they access customer data or company systems?  What types of data will be accessed (PII, PHI, PCI, IP)?  Where will the services be delivered from?  What’s the contract value or term length?  Is this third party replacing an existing one?  Tool Tip : Conditional logic can adjust questions based on prior answers, keeping the form short and relevant.    2. Automated Risk Triage  Based on responses, route the request into the appropriate track:  No Risk Identified → auto-approved or documented as "informational only"  Low Risk → minimal questionnaire or policy acknowledgment  Moderate Risk → standard due diligence questionnaire sent  High Risk  → full risk review, possibly including legal, compliance, and InfoSec reviews  Tool Tip:  Some TPRM Tools allow auto-routing of intake requests based on logic trees.  3. Trackable Intake Queue   Turn intake into a visible, trackable pipeline, not a buried inbox.  You should be able to see:  How many new third parties are awaiting review  What tier each has been assigned  What due diligence is pending or complete  Who “owns” the next step  Tool Tip: Use Trello, Jira, Monday.com , or a built-in TPRM dashboard to manage this visually if your TPRM system doesn't already.    4. Integration with Procurement or Legal Workflows   Make intake the bridge between procurement, legal, and risk, not a roadblock.  Connect your intake system to:  Contract review tools  E-signature platforms (e.g., DocuSign)  Purchase request systems  Procurement tools (e.g., Coupa, SAP Ariba)  Bonus : Add a “TPRM clearance” checkbox in your procurement tool so teams can’t finalize deals without routing through risk mitigation activities.    Real-World Example: Intake Transformation at a Healthcare Provider   A large healthcare company implemented a smart intake form tied to its procurement request portal. The form automatically tiered third parties and launched tailored workflows based on services, data access, and regulatory flags.  Results:  3x faster intake processing time  100% of high-risk third parties flagged before a contract was signed  70% reduction in unnecessary reviews for low-risk third parties  Business stakeholders started submitting requests earlier in the process  Getting Started  Here’s how you can start automating intake and triage:  Map what you want to know up front (data access, geography, system access, business impact)  Build a simple intake form, even in Google Forms or Microsoft Forms if you do not have a TPRM platform  Create decision logic to assign a risk tier based on responses  Route the third party to the appropriate review workflow  Track the intake queue so nothing falls through the cracks    Pro Tip: Make Intake the Gateway, Not the Gatekeeper  Your intake process should empower business stakeholders with clarity and speed, not add layers of friction. Automation allows you to deliver fast “yes/no/how” answers, making it easier to get the right third parties in the door and ensure risky ones are on your radar.    Key Takeaway  Automating intake and triage ensures that TPRM starts at the right moment, with the right information, and the right level of scrutiny is provided. It protects your organization while speeding up business decisions.    Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy  joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third party relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

If a third party, or their key executives, were added to a sanctions list tomorrow, how quickly would you know?  If your answer includes words like “manual process,” “periodic check,” or “we probably wouldn’t,” you’re not alone.  But in today’s geopolitical climate, real-time sanctions and watchlist screening isn’t a nice-to-have, it’s a regulatory and reputational must-have. And thankfully, it’s one of the most automation-ready functions in your Third Party Risk Management (TPRM) toolbox.  The Growing Sanctions Landscape  Governments and global bodies update sanctions and enforcement lists frequently, sometimes daily. These include:  OFAC (U.S. Treasury Department)  EU & UK Sanctions Lists  UN Sanctions List  State-level or regional enforcement databases  But what can happen if you are not actively and continually ensuring your third parties, or their executives, are not on a sanctions list?  Inaction or delayed detection can result in:  Civil or criminal penalties  Loss of government contracts  Reputational harm and media exposure  Regulatory investigations for due diligence failures  This isn’t theoretical. There are documented cases of companies continuing to work with blacklisted entities because the list was checked “once, at onboarding.”  Where Automation Fits In  Automated screening ensures you aren’t relying on point-in-time checks or someone’s memory to flag a critical compliance issue.  Here’s how it works:  1. Continuous Third Party Monitoring  Third Parties are screened continuously against real-time or nightly updated watchlists  If a match is found, it automatically triggers alerts and escalations  Tool Tip:  Many due diligence and TPRM platforms integrate with data providers like Dow Jones, Refinitiv, World-Check, or LexisNexis for live list monitoring.    2. Executive & Beneficial Ownership Checks  Automation isn’t just about third party names. It also scans key individuals tied to the third party (owners, board members, executives) for matches  Tool Tip: Use enhanced due diligence services or APIs that enrich third party profiles with corporate family trees and UBOs (ultimate beneficial owners).  3. Auto-Flagging and Escalation Workflows  Matched entries can be routed to TPRM or compliance teams for review  You can configure risk scores to increase automatically or trigger an urgent reassessment if a third party is flagged  Tool Tip: Use case management tools to document investigation steps, outcomes, and decisions for audit-readiness.  Real-World Example: Catching a Sanctions Match Before It Went Public  A pharmaceutical company’s TPRM team was using automated sanctions monitoring tied to their third party master file. When a supplier’s parent company was added to the OFAC list, the system flagged the match immediately, even though the supplier’s name hadn’t changed.  “If we had waited for the quarterly vendor review, we would’ve missed it, and been in violation,” said their Director of Compliance.   They paused all spend, conducted a rapid risk and legal review, and replaced the third party, all documented through an automated case workflow.    What to Monitor Automatically  Here’s what should be in your automation scope:  Data Type Example Vendor Name Acme Global Services LLC Parent / Subsidiary Orgs Acme Holdings Inc. Ultimate Beneficial Owners John Doe, 51% Stake Key Contacts/Executives Jane Smith, CFO Country of Registration Vendors in embargoed nations How to Get Started  You don’t need a complex setup. Start with:  Free tools:  OFAC’s online SDN check tool or World Bank debarred list  Subscription databases: World-Check, Refinitiv, LexisNexis, or Sayari  API integration: Tie real-time alerts into your TPRM platform or workflow engine (Zapier, Workato, etc.)    Key Takeaways  Sanctions and watchlist screening shouldn’t be a “once and done” task.  Automation helps you stay in compliance without increasing manual workload.  Screening third parties and their principals continuously is essential for managing modern regulatory risk.   Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy  joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third party relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

If you’re still relying on spreadsheets, shared drives, or email threads to collect due diligence evidence from third parties, you're not alone.  But you’re also probably:  Spending too much time sending reminders  Missing key artifacts come audit season  Duplicating efforts across assessments  Struggling to prove historical compliance  This is a ripe area for automation, one that can immediately ease TPRM fatigue and strengthen audit readiness.     The Evidence Burden is Real  In today’s TPRM environment, third parties are expected to provide dozens of artifacts, often across multiple frameworks or request types:  SOC 2 or ISO 27001 reports  Cybersecurity policies & control assessments  Insurance certificates  Penetration test summaries  Business continuity plans  Signed attestations  It’s a lot and often scattered. Multiply that by 50, 200, or 1,000 vendors, and suddenly your risk team is a full-time document chaser.  The Automation Opportunity  Here's how automation can modernize your evidence collection process, reduce back-and-forth, and give you better visibility into what's complete, and what's missing.     1. Auto-Send Evidence Requests on Schedule or Trigger  Set your TPRM application to automatically send evidence requests based on:  Vendor onboarding  Contract renewal dates  Annual or semi-annual reassessment cycles  Triggered events (e.g., scope changes or security alerts)  Tool Tip: TPRM platforms like Mirato, ProcessUnity, or Aravo can generate evidence requests tied to vendor risk tier and lifecycle stage.     2. Use Pre-Built Templates and Smart Forms  Build or reuse standardized templates by risk type or assessment purpose (e.g., privacy, InfoSec, ESG)  Use dynamic forms that adjust based on vendor responses to avoid over-requesting  Tool Tip: Tools like OneTrust or Venminder, an Ncontracts Company enabled conditional logic in assessments to streamline collection.    3. Centralize and Auto-Categorize Submissions  Route uploaded documents directly into the correct vendor profile and artifact folder  Use metadata to label evidence by type (e.g., SOC 2, PCI cert), date, and expiration  Tool Tip: Integrate SharePoint, Google Drive, or your TPRM platform’s document library with automation tags for search and retrieval.     4. Track Expirations and Send Auto-Reminders  Set calendar-based reminders before a certificate or report expires  Automatically notify both internal stakeholders and vendor point of contacts (POCs)  Tool Tip:  Use Power Automate, Zapier, or ServiceNow to flag expiring evidence and send personalized nudge emails.    5. Map Evidence to Controls or Frameworks  Auto-tag evidence to align with relevant controls (e.g., NIST CSF, ISO 27001, CAIQ)  Allow auditors or regulators to view which evidence supports each control  Tool Tip: Use tools with compliance mapping capabilities like AuditBoard, LogicGate, or TrustCloud.  Real-World Example: How a Mid-Sized Bank Reduced Audit Chaos  A regional bank with over 350 vendors had been relying on Excel trackers and shared folders to manage third party evidence. Every audit cycle brought panic, re-requests, and unclear ownership.  They introduced automated workflows that:  Sent initial evidence requests 90 days before renewal  Tracked which vendors responded and what was missing  Auto-tagged files by control area  Alerted internal teams if a document was expired or missing  Result:  85% reduction in last-minute evidence scramble  100% audit-ready vendor files  50+ hours saved per quarter    Getting Started with Evidence Automation  You don’t need a full GRC overhaul to get going. Start small with:  Standardized email templates for reminders  A centralized intake form for vendors to upload files  A shared dashboard to track evidence status by vendor or category  Then build toward automation and integration with your TPRM, GRC, or document management tools.  Pro Tip: Ask for Evidence Once. Use It Many Times.  Good automation also means good reuse. Store and tag documents so you’re not asking for the same SOC report for every new engagement.    Key Takeaway  Chasing down evidence is not a good use of your team’s time, or the vendor’s. Automating the collection, tracking, and expiration process saves effort, reduces errors, and strengthens your TPRM program’s credibility.   Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy  joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third party relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

You’ve built the framework. Defined the roadmap. Clarified the policies, procedures, and objectives. Now, the spotlight is on the final act before execution: the Budget .  Presenting a Third Party Risk Management (TPRM) budget isn’t just a numbers game, it’s a strategic dialogue with your C-suite. Each leader sees risk through a different lens. Your job is to make sure TPRM isn’t seen as a cost center, but as a business-critical function that protects brand value, operational continuity, and long-term growth.  When you step into the room, or join the Zoom, come prepared not only with accurate data, but also with a tailored approach that speaks each executive’s language when presenting your TPRM budget proposal.  Below is a sample budget submission  for a Third Party Risk Management (TPRM) program using estimated figures for a mid-sized organization  with around 1000 third parties , 20% of which are high or critical risk. This submission can be tailored for formal budget meetings, especially when speaking to a C-suite audience.  Sample Budget Example: TPRM Budget Submission: FY2026    Prepared by:  TPRM Program Office/Officer  Submitted to : Executive Leadership Team (CEO, CFO, CRO, CIO, COO, & CMO)  Date: June 6, 2025  Program Scope:  Covers third party onboarding, due diligence, ongoing monitoring, issue remediation, and exit/termination processes across 1000 third parties.  Executive Summary   This budget supports the implementation and maturity growth of our Third Party Risk Management (TPRM) program. It is designed to mitigate increasing third party risk exposure while enabling operational efficiency, regulatory alignment, and long-term resilience.  After aligning our budget with peer business units (e.g. IT, Procurement, etc.) to ensure no overlapping, we are requesting $1,240,000 in total TPRM program funding for FY2026, broken into the categories below.  TPRM Budget Breakdown  Category Detail Estimated Cost (USD) Personnel 3 FTEs (Manager, Analyst, Coordinator) + 1 contract assessor $450,000 Automation/Tools TPRM automation platform (e.g. onboarding, workflow, risk rating, etc.) $225,000 Training & Certification 3 staff attending TPRM conference & obtaining or maintaining certifications $15,000 Consulting Services External maturity model assessment and roadmap facilitation  $50,000  Operations Supplies, licenses, report, software, translation of vendor assessments $10,000 Travel   Site visits to top 10 critical third parties  $20,000 Risk Monitoring Services Third party financial, cyber, ESG monitoring subscriptions $150,000 Contingency Reserve For incident response or unplanned third-party reviews  $50,000 Program Development Internal awareness campaigns, playbook updates, policy refresh $25,000 Total   $1,240,000 Maturity Model Alignment  This budget enables us to progress from a TPRM Level 2 “Defined” to TPRM Level 3 “Integrated” maturity in the next 12 months. We will formalize our processes, integrate toolsets, and implement real-time monitoring with key risk indicators.  Supporting Attachments [Exhibit A-E]  Risk Appetite & Control Gap Analysis  Financial Risk Avoidance Estimator  Industry Peer Benchmarking  Sample ROI from Process Automation  5-Year Third Party Incident Tracker (Regulatory + Financial Impact)  TPRM to Corporate Alignment  This budget aligns to each of our organization’s six corporate goal:  Strategic Enablement  Risk Avoidance ROI  Risk Appetite Alignment  Efficiency Gains  Cyber & Operational Resilience  Brand Protection & ESG  As CEO,  I recognize one of your primary goals is Strategic Enablement :  Supporting secure scaling of partnerships, M&A, and outsourcing  Demonstrating proactive governance and leadership integrity    “As such, here is how TPRM aligns with our enterprise strategy and growth trajectory."    Every initiative in this budget supports not just compliance, but resilience and reputation. If we want to expand into new markets, partner with innovative vendors, and build customer trust, we must ensure that our third parties don’t introduce vulnerabilities. This budget enables proactive oversight that protects our ability to scale with confidence.    As CFO,  I recognize one of your primary goals is Risk Avoidance ROI :  Helping to avoid regulatory fines averaging $1.4M per incident (source: IBM/Ponemon)  Automate savings of ~$100K/year in reduced manual review hours    "So, Let’s talk about cost avoidance and value protection."    TPRM doesn’t generate revenue, but it shields it. Consider the financial impact of a third party data breach, regulatory fine, or supply chain disruption. We’ve included an incident impact analysis and a financial risk mitigation model. Tools like automation platforms may have upfront costs, but they reduce FTE hours and shorten due diligence cycles, providing long-term savings. This budget protects the bottom line.  As CRO: I recognize one of your primary goals is Risk Appetite Alignment:   Providing real-time risk visibility across 1,000 vendors  Improving response time to regulatory inquiries and audit findings    "As such, this is risk management at scale."    Our roadmap supports maturing the program to keep pace with emerging risks—cybersecurity, ESG, concentration, and geopolitical instability. With this budget, we gain visibility across the supply chain, build consistency in due diligence, and drive risk-informed decision making across the enterprise. Risk appetite isn’t just a principle, it’s operationalized here.    As COO:  I recognize one of your primary goals is Efficiency Gains :  Accelerating vendor onboarding timelines by ~30%  Reducing disruptions due to unknown vendor risks    "As such, TPRM budget plan enables operational efficiency and reduces friction."    Every tool and resource in this plan contributes to smoother onboarding, faster assessments, and fewer surprises post-contract. We’ve mapped resources to real operational demand, based on our third party portfolio’s inherent risk tiers. With the right investment, we reduce bottlenecks and improve our vendor lifecycle management without overburdening your teams.    As CIO: I recognize one of your primary goals is Cyber & Operational Resilience:   Detecting risk in data access and system integrations pre-contract  Supporting zero-trust third party architecture   "This budget strengthens our IT risk posture through third party visibility and integration support."   In today's interconnected ecosystem, our third parties don't just support the business, they connect to our systems, access sensitive data, and influence our security perimeter. This budget funds the tools and intelligence we need to proactively assess those relationships before they pose a risk.     Specifically, it supports:   A TPRM platform that integrates with ITSM and procurement tools for seamless intake and tracking  Ongoing cyber risk monitoring of vendors handling sensitive data or system access  Risk scoring tied to our internal architecture and controls, improving alignment with zero-trust and defense-in-depth strategies   By investing here, we’re ensuring that third party risks don’t undermine the protections we’ve worked so hard to build internally. It’s not just about compliance, it’s about maintaining system integrity, business continuity, and trust in our infrastructure.    We’re already seeing regulatory expectations shift toward shared accountability in third party breaches. This budget helps us stay ahead of those trends, and aligned with frameworks like NIST, ISO 27001, and the updated SEC guidance.    As CMO: I recognize one of your primary goals is   Brand Protection & ESG :   Assessing vendors for reputational risk, DEI, and ESG performance  Avoiding headline risk from third party failures    "We know that Brand trust is built on vendor integrity."  In a world where consumers and regulators scrutinize supply chains, a single third party misstep can create reputational headlines. Our TPRM budget supports robust assessments of vendors that touch customer data, brand experience, or ESG commitments. This is not only a risk measure, it’s a marketing safeguard.  Overall   What’s included in this Budget (and Why It Matters):   Resources: We’ve forecasted FTE and contractor needs to meet expected assessment volumes and maintain SLA targets.  Operations: This includes daily workflow support and practical tools to run an efficient program.  Training & Travel: To keep our team skilled and informed, and to support onsite reviews for critical third parties.  Maturity Investments:  We’ve aligned our asks to our current maturity level and the next step in our TPRM evolution.  Technology: We’ve assessed ROI for tools that reduce manual workloads and drive consistency.  We’ve also included benchmarking against peer organizations and a review of industry incidents and fines over the last five years to contextualize our ask. This isn’t “nice to have.” This is “mission critical.”    Bottom Line:   This is a proactive investment in resilience. It’s a shield for our brand, a hedge against regulatory and operational exposure, and a step toward a smarter, more scalable enterprise. I’m not just asking for budget, I’m asking for buy-in to protect what we’re building, the way we build it, and deliver it.   Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy  joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third par ty relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

If you’re sending the same full-blown risk assessment to every third party, whether they host sensitive data or simply mow your corporate lawn, it’s time for smarter automation.  Third Party tiering isn’t just a best practice, it’s a necessity. But too often, it’s handled manually or inconsistently, leading to:  Wasted time on low-risk third parties Insufficient scrutiny of high-risk partners  Frustration from internal teams and third parties alike  With automation, you can streamline how third parties are tiered, when they’re reassessed (i.e., their assessment cycle time), and whether they trigger enhanced due diligence, all without adding manual work.  Why Tiering Matters  Third Party tiering (or risk segmentation) helps you:  Prioritize time and resources  Tailor assessments based on risk  Justify lighter-touch reviews when appropriate  Align to internal policies and regulatory expectations  But the old way of doing it, with manual scoring, spreadsheet-based tiers, and ad hoc judgment, doesn’t scale. How Automation Improves Vendor Tiering & EDD  Let’s break this down into two key functions that benefit from automation:  1. Automated Vendor Tiering  Start by automatically assigning third party to tiers based on logic built into your intake or inherent risk assessment process.  Common inputs include:   Type and amount of data accessed (e.g., PII, PHI, cardholder data)  If the third party will access your organization's internal network and which environment (e.g., VPN, production environment)  Geographic presence or location of services  Regulatory exposure (e.g., HIPAA, GDPR)  Criticality to business operations    Tool Tip: Use intake forms or TPRM platforms that include conditional logic. Based on answers, third parties are automatically placed into Tier 1 (High), Tier 2 (Moderate), or Tier 3 (Low/Non-Critical).  Example Automation:   Business Owner selects “Yes” to the third party accessing customer PII → Platform sets them as Tier 1 → Full information security risk assessment initiated automatically.  2. Triggering Enhanced Due Diligence (EDD)  Once a third party is tiered, you can then set triggers to launch deeper reviews on a regular cadence, as well as if/when something changes.  EDD may include:   Expanded assessments Onsite or virtual visits Background checks on executives  Penetration testing evidence  Financial statement reviews  Crisis response documentation (e.g., BCP/DR tests)  Trigger Conditions Could Include, but not be Limited to:   A risk score threshold is exceeded  The third party is acquired by another organization and there is a change in leadership The third party will now host data offshore Contract change increases data access  Negative media or litigation is detected  Tool Tip: Connect monitoring platforms (BitSight, Security Scorecard, RiskRecon, Sayari) to your TPRM system to ensure events auto-trigger reassessment workflows.  Real-World Example: How a Tech Company Reduced Third Party Assessment Volume by 40%  A SaaS firm supporting fintech clients struggled with over-assessing third parties. Everyone received the same 200-question InfoSec review, whether they hosted client data or just helped with branding.  The organization decided to implement an automated tiering engine using a simple logic tree:  Tier 1: Hosts client data or business-critical systems → full TPRA Information Security Questionnaire + SOC 2  Tier 2: Indirectly supports regulated operations → limited questionnaire  Tier 3: No data access, non-critical → no further review  When a Tier 2 vendor’s risk rating system score dipped significantly, the system triggered an EDD workflow with an escalated assessment.  Results after 6 months:   40% fewer full assessments  Average assessment cycle time dropped 30%  Fewer third party complaints about irrelevant or overbearing reviews  What to Include in an Automated Tiering Framework  The TPRA community has created a free inherent risk questionnaire that can be leveraged within an automated tiering framework. If you are a TPRA member, you can obtain the inherent risk questionnaire template here . Getting Started  You don’t need to go from 0 to full automation in one step. Start with:  A basic inherent risk assessment that captures core risk drivers  A rules-based tiering system in Excel, Power Automate, or your TPRM tool  Clear definitions for Tier 1, 2, and 3, and what EDD should be performed for each tier Additional triggers for EDD (e.g., change in data access or poor cyber score)  Pro Tip: Automation Doesn’t Mean “Set and Forget”  You still need risk oversight. Automation just ensures your attention is focused on the third parties who need it most and when they need it most.     Key Takeaways  Treating all third parties the same is inefficient and risky  Automated tiering reduces noise and sharpens focus  Enhanced due diligence should be triggered by real risk, not just policies  You can implement this in phases with existing tools  Author Bio Heather Kadavy Senior Membership Success Coordinator Heather Kadavy joined the Third Party Risk Association (TPRA) in 2023 as the Senior Membership Success Coordinator. In recent year(s) Heather has been providing freelance TPRM consulting work to various organizations after retiring from a Nebraska financial institution after nearly 35 years where she oversaw and managed critical programs of the organization including Third Party Risk Management, Information Security, Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third par ty relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years. Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".

Third-party risk management (TPRM) primarily aims to safeguard the organization and its customers from potential threats, including data breaches, service interruptions, and hefty regulatory fines—particularly in heavily regulated industries. While the principles of TPRM may seem simple, putting them into action can be quite intricate, requiring a web of interconnected and sometimes complex processes and tasks. However, even the most well-crafted TPRM framework can fall flat without a strong foundation of accountability. Without accountability, the consequences can be severe, leading to increased risk exposure, regulatory non-compliance, and potential damage to the organization's reputation. Simply put, accountability is the backbone of effective TPRM; it ensures that responsibilities are clearly defined and distributed among stakeholders, with everyone playing a vital role in managing risks. To ensure effective accountability, many organizations utilize the Three Lines of Defense model established by the Institute of Internal Auditors (IIA) in 2013. This model delineates the roles in risk management: Operational Management as the first line of defense. Risk Management and Compliance as the second line. Internal Audit, which provides independent assurance, is the third line. This framework clarifies responsibilities and enhances risk management effectiveness, making it ideal for establishing accountability in TPRM. Now, let's explore each of the three lines and their roles in TPRM. First Line of Defense:  The frontline employees who directly handle and manage the products or services provided by third-party vendors and service providers. Their primary TPRM responsibilities include identifying and managing risks associated with third-party offerings, such as data security breaches, service interruptions, and regulatory non-compliance. They are also responsible for setting service level agreements (SLAs) and monitoring and managing third-party performance. They are also typically responsible for completing inherent risk assessments and are crucial in establishing exit strategies for high-risk and critical third parties should they need to end the relationship. Second Line of Defense : This group includes dedicated third-party risk management teams, the enterprise risk team, and subject matter experts from compliance, legal, finance, information security, business continuity, and more. They establish the policies, frameworks, and tools necessary for effective vendor risk management while monitoring first-line activities to ensure consistency and quality risk measurement and management Third Line of Defense : An independent assurance function, often comprised of internal auditors who assess and monitor the overall effectiveness of third-party risk management activities. Their role is crucial in providing an unbiased evaluation of the TPRM process. They evaluate the effectiveness of risk management frameworks, the quality of the risk management work, and compliance with all laws and regulations. They report any gaps or weaknesses to the board of directors and senior management and provide recommendations for improvement. Regular audits of the TPRM framework and processes are a necessary part of a healthy TPRM function. The Board of Directors and Senior Management:  When it comes to managing third-party risks, each line of defense plays a crucial role in keeping accountability in check. However, the ultimate responsibility for making sure these defenses work effectively falls on the board of directors and senior management. They’re the ones who define the company’s appetite for risk around third parties and shape the governance strategies that guide the organization. The board and executive team must be engaged to effectively manage third-party risks. This means not just approving risk management policies but also setting a strong ‘tone from the top’ that highlights the importance of TPRM at the organization. The board should also review any issues occurring from critical third parties, review independent risk assessments, and allocate sufficient resources for effective third-party risk management. By integrating these considerations into the company’s broader strategies and decision-making, they can ensure that third-party risks are addressed proactively and effectively. Whether your organization adopts the three lines of defense strategy or chooses a different structure, one thing is clear: accountability at all levels of the organization is essential for effective third-party risk management (TPRM). When everyone—from frontline employees to executives—understands their roles and responsibilities, it creates a solid foundation for managing the risks associated with using third-party products and services. This clarity not only aids in identifying and mitigating third-party issues but also fosters a culture of collaboration and vigilance, empowering everyone to contribute to safeguarding against third-party risks. 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.

Maintaining a compliant third-party risk management (TPRM) program involves active collaboration between multiple stakeholders. Compliance isn’t just an objective but a shared responsibility throughout your organization, from senior management and the board of directors to the business lines and vendor owners. Vendors themselves also have a responsibility to comply with TPRM policies and regulations, so it’s crucial to develop a strategy that involves effective collaboration.   In this blog, you’ll learn some tips on collaborating with your vendors to achieve compliance in your TPRM program. You’ll also learn some next steps to take when a vendor is creating challenges in your compliance efforts.  How to Achieve Third-Party Risk Management Compliance Through Vendor Collaboration  TPRM program compliance involves more than just reacting to specific laws and regulations. It's about being proactive and considering internal policies, rules, and industry best practices that are designed to maintain effective TPRM programs. Below are some proactive strategies to collaborate with your vendor and achieve TPRM program compliance across multiple expectations and standards:   Set a culture of compliance – In order to effectively set expectations for your vendors' compliance, it’s advisable to first establish your organization's values and practices for your TPRM program. Organizations should communicate priorities internally to foster a culture of compliance that’s clearly understood and endorsed by all stakeholders. Once this culture has been established, it can be more effectively conveyed to your vendors, leading to smoother collaboration and program compliance.  Follow up on due diligence –   Compliance issues are usually identified during the due diligence process as you collect and review the vendor's documentation. Follow up on any issues that were found and ask for clarification or more information as needed. In some cases, the vendor may have additional documentation that can verify its compliance with your expectations.  Negotiate a compliant contract –   Make sure to include contract provisions that require both parties to comply with applicable laws and regulations. These provisions could relate to areas such as data protection, privacy, and breach notification requirements. Contract provisions could also outline any internal compliance requirements set by your organization, such as following your corporate policies or industry standards.  Communicate early and often  – Don’t assume that your vendor is staying updated on changing regulatory expectations and industry standards. New state privacy laws continue to emerge, and cybersecurity standards are revised to address new vulnerabilities, so it's essential to frequently communicate your expectations to ensure the vendor is aware of relevant changes and is updating their processes as needed. This ongoing communication is key to building a collaborative partnership.  Work together on remediation –   Just like compliance should involve vendor collaboration, so should remediation plans. Whenever there are issues with compliance, work with the vendor to develop a remediation plan that’s actionable, effective, and time bound. Vendors may be more responsive to requests for improvement if they collaborate on the remediation plan and can identify any roadblocks to success.  Addressing Challenges With Vendor Compliance  It’s not uncommon to face compliance challenges with vendors who might have different strategic goals and priorities. Some vendors may choose to do the bare minimum in compliance and only meet applicable laws and regulations. Here are some suggestions for handling a vendor that isn’t collaborative in your compliance efforts:  Talk with the vendor – First, sit down and have a conversation with the vendor about any issues to better understand their perspective. There may be a misunderstanding about a certain requirement, or they may not have the resources to meet your expectations. These conversations can help clarify your compliance goals and determine if you and the vendor can work toward an improvement plan.  Document issues and progress – Make sure to document any compliance issues and improvement plans, along with a time frame for remediation. It’s important to track any progress made on the compliance issue and regularly follow up with the vendor for updates until the issue is resolved.  Increase monitoring – In addition to documenting the compliance issue, you may need to increase your ongoing monitoring activities with the vendor. Depending on the issue, this may include more frequent reviews of the vendor’s financial health, business continuity risk, security testing, or negative news.   Move forward with the exit strategy  – If the vendor isn’t following the requirements to an extent that’s too severe and beyond your risk tolerance, you may need to think about ending the relationship. Evaluate your plan for ending the relationship and start talking to the right people to make sure your organization can end the vendor relationship securely. Following through with your plan to end the relationship might take more time and resources, but it could be a worthwhile effort to keep your TPRM program in compliance.  Collaborating with your vendors through due diligence, careful contract negotiations, and remediation plans can be an effective strategy for TPRM program compliance. When you build a culture of compliance that extends to your vendors, your organization’s TPRM program can achieve many benefits, such as satisfying regulators and following your internal standards.

Written by Supply Wisdom It's important to remember that the primary objective of these regulatory bodies is to ensure that you are effectively protecting your business and your customers from unnecessary third-party risks. This approach aligns closely with third-party risk management best practices. Key Regulatory Bodies and Their Guidance Office of the Comptroller of the Currency (OCC) The OCC's 2013-29 Bulletin outlines essential principles for third-party risk management. Key areas of concern include: Planning: Ensure you have a comprehensive plan to manage third-party relationships. Due Diligence: Evaluate vendors against your organization’s risk tolerance before onboarding. Contractual Expectations and Enforcement: Define and enforce your expectations to limit liability. Ongoing Monitoring: Continuously monitor vendor performance and maintain accountability. Roles and Responsibilities: Assign clear roles and responsibilities within a structured framework. Reporting: Track and document third-party relationships for reporting and analysis. Transitioning: Develop contingency plans for service disruptions and transitions. Auditing: Utilize objective evaluations to assess your processes and tools. Consumer Financial Protection Bureau (CFPB) The CFPB emphasizes protecting consumer interests, with guidelines ensuring that financial institutions manage risks effectively to avoid consumer harm. Federal Deposit Insurance Corporation (FDIC) The FDIC's risk management guidance focuses on maintaining the stability of the financial system. It requires banks to implement robust third-party risk management practices. Federal Financial Institutions Examination Council (FFIEC) The FFIEC provides a framework for financial institutions to assess and manage third-party risks, ensuring compliance and safeguarding operations. Joint EU Supervisory Authorities , including the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority oversee the operational resilience of EU financial sector. Together, these authorities oversee the Digital Operational Resilience Act (DORA), which mandates that firms: Maintain Strong IT Systems: Ensure systems are resilient against cyber threats. Regular Testing: Conduct regular tests to assess the effectiveness of their IT security measures. Incident Reporting: Implement procedures for reporting significant cyber incidents. Third-Party Risk Management: Extend risk management practices to third-party Information and Communications Technology (ICT) service providers. Implementing Effective Third-Party Risk Management The scrutiny of the financial services industry, as well as many other industries, continues to increase. It's not enough to simply have a supplier monitoring tool; you must have an effective risk management process, framework, and reporting structure to manage third party vendors throughout their lifecycle. About Supply Wisdom: Supply Wisdom provides real-time alerts and insights to help companies track and mitigate supplier- and location-based risks. Our comprehensive solution supports TPRM processes, including streamlined compliance with regulatory requirements. Contact us for more information or to get started with a free trial. Let us help you develop robust strategies and plans for third-party oversight within your organization.

By Hilary Jewhurst, Head of Third-Party Risk Education & Advocacy at Venminder     For many, residual risk is a confusing third-party risk management (TPRM) concept, but it’s important to understand how and when residual risk is calculated and its proper utilization in your TPRM program. Residual risk is a vendor’s remaining risk after controls have been applied.  Determining a residual risk rating is important for two reasons:   First, it helps determine if you need more or different controls before beginning or continuing a vendor relationship.  For example, you might require the vendor to conduct more systems testing or implement more frequent monitoring to mitigate identified issues.   Second, it helps determine if the residual risk is acceptable.  For example, your organization may be willing to accept high residual risks if the vendor is the sole provider of a product or service crucial to meeting your goals. However, if an existing vendor has high residual risk and, after several attempts, fails to provide evidence of sufficient controls, you may decide to discontinue the relationship.     The Residual Risk Rating Process on Vendors  Let’s explore the steps to determine and assign a vendor’s residual risk rating:  Determine inherent risk: There’s always some level of risk with third-party products, services, and relationships. The specific types and amounts of those risks are typically identified during an inherent risk assessment, which considers the vendor’s raw risk, or the level of risk before any controls are applied.   Conduct due diligence:  This involves reviewing and assessing a vendor's risk management practices and controls to mitigate the identified risks and determine if they’re sufficient.   Review vendor controls:  These are systems and measures implemented to detect, prevent, or rectify unwanted events. They’re meant to mitigate the risks in vendor relationships, products, and services and provide reassurance in the risk management process.  Assign a residual risk rating:  The level of residual risk can only be determined after completing due diligence, when a subject matter expert (SME) concludes the review of the vendor's controls and offers a qualified opinion regarding their sufficiency in mitigating the risk. In other words, do the vendor’s controls lessen those risks' likelihood, occurrence, severity, or impact? Many organizations quantify residual risk with a rating or score, often using the same risk scale for determining inherent risk, such as low, moderate, or high.  Understand your risk appetite:  This is the level of risk your organization is willing to accept to pursue its goals and objectives. After determining a vendor’s residual risk, your organization will need to decide if that risk is acceptable or if you need to move on from the relationship.   Controls can't eliminate a vendor’s risks altogether. Think of it like a seatbelt in a vehicle. Wearing a seatbelt can lessen the likelihood of severe injury or death in an accident. Still, it can't prevent an accident, so additional controls are necessary, such as driving the appropriate speed limit. Most individuals recognize the risks associated with driving but are willing to take those risks with proper controls in place. That’s the concept of residual risk in a nutshell – are the controls enough to make you comfortable with the remaining risks while pursuing your objectives?    Calculating a Vendor’s Residual Risk  You need to know how to calculate a vendor’s residual risk.   As a high-level concept, residual risk can be expressed as:  Inherent Risk + Controls = Residual Risk .   To further refine that concept with a calculation, you might consider one of these formulas:  Residual Risk = Severity × Probability:  For example, a vendor accesses, processes, transmits, or stores personally identifiable information (PII). This has a high inherent information security risk because of the potential severity and probability of a data breach. The vendor has strong encryption and data de-identification controls, so if there’s a network breach, hackers won't be able to utilize much of the data, reducing the potential severity of the breach. The vendor also has regular penetration testing and proactively monitors for security events, which can lessen the probability of a breach. Here, the inherent risk is high, but the residual risk is moderate.  Residual Risk = Threats × Vulnerability:  Another vendor also accesses, processes, transmits, or stores PII, and customers can access account data through a vendor-provided mobile app. Data could be accessed through the vendor network and the customer's mobile device, expanding the attack surface and increasing the threat of a breach. A review of the controls shows the vendor doesn't utilize multi-factor authentication, which increases the vulnerability to data theft or cyberattacks. Here, the inherent risk is high and the residual risk is also high.  There are other formulas organizations use to calculate residual risk. No matter which method you choose, it’s important to document your methodology and use it consistently, so there’s continuity in the decisions made with regards to residual risk ratings.    Avoiding the Most Common Residual Risk Mistakes in Vendor Risk Management  The residual risk rating should seldom be used to determine the frequency and intensity of core risk management and monitoring activities.    That’s determined by the inherent risk rating. How often risk is re-assessed, the scope and frequency of due diligence, required performance management activities and review cadence, business continuity reviews, and monitoring requirements should all be aligned to the inherent risk.    This is because controls that are only reviewed at a specific point in time may be effective initially but can become less effective or fail over time. Vendor risks are constantly changing, and external events like industry changes, regulatory updates, geopolitical developments, new technologies, or consumer behaviors are factors that can’t be influenced by a vendor's controls. A high-risk vendor with sufficient controls may have a residual risk rating of moderate, but that should never result in a decreased frequency or intensity of core risk management activities; the risks are still high regardless of the control environment.  In conclusion, residual risk ratings are best used as post due diligence data points to determine if more or different controls are necessary before you can confidently move forward with the vendor engagement and if the remaining risks are within your organization’s risk appetite.

“Emily was a mid-level manager in the risk management department of a major financial institution. One day, the company faced a significant challenge: a critical vendor experienced a data breach, exposing sensitive client information. The CEO tasked Emily with leading the Third Party Risk Management (TPRM) response team to address the crisis. Emily had handled vendor assessments before, but this situation required swift and decisive action. She quickly assembled a cross-functional team, including IT, legal, compliance, and communications experts. Emily knew that transparent communication and coordinated efforts were essential. She initiated daily briefings to keep everyone informed and aligned on the response strategy. Emily also reached out to the vendor, establishing an open line of communication to understand the breach's scope and implement immediate risk mitigation measures. Recognizing the need for long-term solutions, Emily led a thorough review of the company's TPRM framework. She identified gaps and proposed enhancements, such as more stringent vendor vetting processes and continuous monitoring systems. Her proactive approach not only mitigated the immediate risk but also strengthened the organization's overall TPRM program. The successful handling of the crisis and the subsequent improvements earned Emily high praise from senior leadership. Her ability to lead under pressure and implement effective risk management strategies led to her promotion to head of the TPRM division.” This anecdote highlights how taking charge in a TPRM crisis, fostering collaboration, and driving systemic improvements can propel career growth and demonstrate essential leadership qualities.   TPRA’S LEADERSHIP LADDERS Originally developed by TPRA's Women in TPRM "Lead" work group, “Leadership Ladders” is a training activity designed for all current and aspiring leaders within the Third Party Risk Management (TPRM) industry.  Each box on the slides and ladders-style game board is linked to a valuable resource–including customized guides, blogs, videos, quizzes, and more–with the goal of enhancing your leadership potential through buildable skills and expert insights. Any professional, regardless of what stage they're at in their career, can find value in this activity.   “ Leadership Ladders ” involves focusing on the progression of leadership skills, traits, and responsibilities at different levels within an organization.  It is a transformative experience that challenges you to evolve and grow. DIFFERENT LEADERSHIP LEVELS Entry-Level Leadership : Focuses on the initial stage, key responsibilities, and essential skills (e.g., team leadership, basic project management). Mid-Level Leadership : Covers the next stage, focusing on more complex responsibilities (e.g., departmental management, strategic planning). Senior Leadership : Involves the traits and skills needed at the senior level (e.g., executive decision-making, vision setting). Executive Leadership : Focuses on the top-tier leadership level, emphasizing overall organizational leadership and high-stakes decision-making. Each of these levels requires a new set of skills and understanding to meet its challenges, focusing on specific responsibilities and collaborative efforts.  TPRA’s “Leadership Ladders” can assist with developing those skills no matter what level of leadership you are working towards. KEY CATEGORIES UNDER THE TPRA LEADERSHIP LADDERS Core Competencies  (Communication, Collaboration, Confidence, Cultivating Relationships, Coaching) TPRM Lifecycle Budgeting HR Process Boundaries Driving Strategy & Influencing Change Navigating Executive Leadership Discussions Crucial Conversations Mentorship Public Speaking & Getting Published   LEADERSHIP LADDERS PLAY A CRUCIAL ROLE IN CAREER DEVELOPMENT FOR SEVERAL REASONS Structured Progression Clear Pathways : Leadership Ladders provide a clear roadmap for career advancement, helping individuals understand the steps required to move up within an organization. Goal Setting : They enable employees to set specific, achievable goals for their career progression, making it easier to track and measure success. Skill Development Targeted Learning : Different levels on the Leadership Ladders require different skills. By understanding these levels, individuals can focus on developing the necessary skills for their current and next roles. Continuous Improvement : Leadership Ladders encourage a mindset of continuous learning and improvement, essential for personal and professional growth. Increased Engagement and Retention Motivation : Clear pathways for advancement can increase motivation and job satisfaction, as employees see tangible opportunities for growth. Retention : Organizations with well-defined pathways to leadership often experience lower turnover rates, as employees are more likely to stay when they see potential for career advancement. Effective Succession Planning Preparation for Leadership : Leadership Ladders help organizations identify and prepare future leaders, ensuring a smooth transition when current leaders retire or move on. Consistency : They help maintain organizational continuity by ensuring that new leaders are well-prepared and aligned with the company's culture and values. Enhanced Organizational Performance Better Leadership : As employees move up the ladder, they bring enhanced skills and experience to their roles, leading to more effective leadership and improved team performance. Strategic Alignment : Leadership Ladders ensure that individuals at all levels understand and align with the organization's strategic goals, leading to more cohesive and focused efforts. Personal Growth and Fulfillment Self-Awareness : Working through the Leadership Ladders activity requires self-assessment and reflection, helping individuals understand their strengths and areas for improvement. Achievement : Successfully progressing through the Leadership Ladders activity provides a sense of accomplishment and personal fulfillment, contributing to overall well-being. Competitive Advantage Attracting Talent : Organizations known for their strong leadership development programs are more attractive to top talent. Market Positioning : Effective leadership at all levels enhances an organization's reputation and competitive positioning in the market.   In summary, Leadership Ladders is great for both individuals and organizations. It provides a structured approach to career development, promoting skill growth, increased engagement, and retention. It also can assist with facilitating effective succession planning, enhance overall performance, and contribute to personal fulfillment. For organizations, they are a key tool in building a robust leadership pipeline and maintaining a competitive edge.   CHECK IT OUT We encourage you to assess your current leadership level and work towards the next. Have fun and expand your knowledge: https://www.tprassociation.org/leadership-ladders – play TPRA’s thought-provoking Leadership Ladders game enriched with additional resources such as videos, interviews & quizzes, and whitepapers.