By: Halle Reynolds, TPRA Marketing & Social Media Internship The Third Party Risk Management Lifecycle (noted below within "Starting a TPRM Program") is recommended for every organization seeking to implement a TPRM program. How programs implement the lifecycle is dependent upon their organization’s risk appetite (or the level of risk they are willing to accept), as well as the complexity of their third party relationships. After an organization has established an initial TPRM program, consideration should then be given to enhancements that will accelerate TPRM program efficiency and effectiveness in addressing third party risk. The incorporation of the following best practices is contingent upon an organization's overall objectives, budget, and size. STARTING A TPRM PROGRAM TPRM programs begin with a blueprint—a plan for how your program will function. This layout should include aspects from the Third Party Risk Management Lifecycle: Planning & Oversight, Pre-Contract Due Diligence, Contracting, Continuous Monitoring, Disengagement, and Continuous Improvement. At a minimum, it is best practice to have the following processes in place if you are just beginning your program: Planning and Oversight - Establish program governance, budget, policies and procedures, third party inventory, and risk rating methodology. Pre-Contract Due Diligence - Integrate into the Procurement process and ensure due diligence/risk assessment reviews are performed before contracts are signed. Contracting - Develop a contract template that defines expectation of third party controls that need to be in place, as well as allow for the review of said controls by your organization. Continuous Monitoring - Run all third parties through an Inherent Risk Questionnaire (IRQ) and establish third party re-assessment triggers and cycle times based on the inherent risk ratings. TPRA Members can access our Inherent Risk Questionnaire (IRQ) Template on our TPRM Resource page . The IRQ can be used to identify due diligence requirements and determine the inherent risk rating of each engagement with your Third Party Service Provider (TPSP). Disengagement – Establish a termination checklist, to include the handling/destruction of data and transition to another third party. Continuous Improvement – Communication and education are key when starting a program. Ensure you have top-down support, as well as the support of the business. The value you receive from a basic TPRM program can be invaluable. It allows your organization to create a holistic risk lens into your organization’s risk landscape and proactively address and mitigate third party risk in a timely manner. TPRM programs are also required by many regulators, Board members, and customers. ENHANCING YOUR TPRM PROGRAM Once you’ve established your TPRM program, then you can begin to enhance and/or automate certain activities to ensure you are focusing on what matters most in a timely and efficient manner. Below are some examples of enhancements you could make to your program. We will work through the same TPRM lifecycle and discuss enhancements to each phase. Planning and Oversight - Develop a steering committee to address highest level of risk. Ensure a risk escalation and acceptance process is in place (you may what to do this at a foundational level as well). Pre-Contract Due Diligence - Ensure you have a seat at the table with those making third party risk-based decisions, such as Procurement, Legal, Compliance, and others. Actively participating in conversations will ensure your program gains the support it needs, as well as ensures you are able to obtain the necessary evidence and documentation to perform your reviews. Contracting - You may want to “own” certain contract clauses to ensure that any redlines to specific clauses are reviewed by your team. Small changes could affect what evidence you receive from third parties and how you can assess them. You may also want to add noncompliance triggers to your contracts. These triggers ensure you can take action against contract non-compliance. Continuous Monitoring - Once your program is established, you can then begin to work through nth party reviews. An nth party is a 4th or 5th party (or your third party’s third parties). It’s important to also review nth parties, especially if they will access your organization’s data, are customer facing, or support a key activity related to the product/service you are purchasing from your third party. Disengagement – Begin to maintain a data inventory (by requesting a data flow diagram from your third party) so that you can more accurately pinpoint data destruction requirements, to include data at nth party locations. Another process enhancement for the disengagement phase is to establish exit strategies during the pre-contract phase to leverage during the disengagement phase. If the third party supports a critical function for your business, it is a good idea to have a transition plan in place before entering into an agreement with the third party. Continuous Improvement – Continuously re-evaluate risk domains and enhance as the risk environment changes (e.g., Environmental Social Governance (ESG), Ransomware, Pandemic). It is also important to benchmark off peers. Chances are, you're not the first to go through something. Benchmarking is the best way to quickly learn tips and tricks for implementing process enhancements. The value of continually enhancing your TPRM program is staying up to date on risk trends and ensuring your program is flexible enough to incorporate when/were needed. AUTOMATING YOUR TPRM PROGRAM At this point, your program may be gaining momentum quickly as you’ve established the foundational building blocks of your TPRM program and incorporated certain program enhancements. You may now be interested in seeking out ways to automate your program by incorporating tools that can lessen the strain on resources and allow for scalability. We will again work through the same TPRM lifecycle and discuss activities you can automate within each phase. Planning and Oversight - Consider a governance, risk, and compliance (GRC) or TPRM platform that provides workflow, assessment, and reporting for third party risk. A comprehensive tool can also allow you to look across third party risk to determine key risk indicators and trends. Pre-Contract Due Diligence - A GRC or TPRM platform can also assist with automating the questionnaire process and allow you to obtain evidence quicker during the pre-contract due diligence phase. You may also consider joining a third party risk assessment collective (where third parties share the responses to one questionnaire with several organizations) to assist with third party response time. Contracting - Consider implementing a tool that will notify you when contracts are no longer in compliance with updated contract templates. This helps you ensure that you are maintaining contract compliance with your third parties. Continuous Monitoring - A tool that can proactively monitor your third parties is a risk rating/intelligence tool. These tools scan the parameter of third party networks and look for public facing vulnerabilities. They are non-intrusive and can often provide you with accurate information on an organization’s vulnerability management and technology refresh program. More innovative tools can also scan the dark web and look for stolen data and/or accounts that belong to third parties. They can also tell you if a third party has offshore locations, as well as the geo-political environment of said offshore location. Disengagement – Certain tools can assist with identifying when non-compliance triggers are met (which could ultimately lead to a relationship termination). They can also assist with the data transition process. Continuous Improvement – Automatically feeding into your organization's overall risk management program can help make more informed decisions when looking across the enterprise. Many tools can integrate into risk management tools your organization may already have, thus providing your organization with a more holistic risk lens. This would also allow your organization to focus on efforts to address more critical risk. Automation can lead to better collaboration, improved transparency around risk, program scalability, quicker response to threats, and provides less burden on resources. But if you do not have an established program, automating too soon can lead to accelerated issues and misalignment on risk-based decisions. You can find value in automating workflows, assessments, continuous monitoring activities, risk follow-up and validation, reporting, and other third party lifecycle activities. CONCLUSION Most TPRM programs start out small and work their way up to more advanced risk management techniques. When beginning, it won’t be necessary to incorporate most tools right away. You may also want to consider current tools your organization already utilizes and determine if/how you can incorporate them into your TPRM program. You should also consider your program's overall objectives, budget, and size when considering which enhancements and tools to implement. The key to evaluating TPRM program maturity vs associated value is understanding your organization's risk appetite to further develop your TPRM program's risk-based approach to assessing, monitoring, and mitigating third party risk. For more information on this topic, check out the TPRA's YouTube series "TPRM Explained - TPRM Program Maturity vs. Associated Value" .

By: Heather Kadavy, Sr. Membership Success Coordinator for TPRA In the ever-evolving landscape of Third Party Risk Management (TPRM), sometimes called Vendor Risk Management (VRM), staying ahead of the game is crucial. One tool that has gained recognition and attention in recent times is the SPARK Matrix™, an assessment and ranking framework. About the SPARK Matrix™ The SPARK Matrix™ includes, but is not limited to: 1.      Informed Decision-Making : One of the primary benefits of the SPARK Matrix™ is its ability to provide organizations with a benchmark for selecting VRM solutions. With the complexities of vendor-related risks growing, it is crucial to have a standardized framework for evaluating the available options. The SPARK Matrix™ facilitates informed decision-making by comparing capabilities, features, and performance across different solutions. 2.      Risk Mitigation : Effective VRM is all about identifying and mitigating risks associated with third party vendors. The SPARK Matrix™ helps organizations to understand the landscape of VRM solutions and their capabilities, allowing them to tailor their risk mitigation strategies effectively. It can be a valuable tool for staying proactive in the face of evolving risks. 3.      Regulatory Alignment : As regulations around data protection and privacy evolve, it is essential for VRM solutions to stay aligned with these changing requirements. The SPARK Matrix™ assesses the level of alignment with regulations, reducing the risk of non-compliance and associated penalties. This is particularly crucial for organizations handling sensitive data.   Congratulations to Our TPRM Vendor Members Noted on the Matrix We would like to extend our warmest congratulations to TPRA's current Vendor Members who were recognized in the SPARK Matrix™: Vendor Risk Management (VRM), 2023 . These companies (listed below in alphabetical order) have demonstrated their commitment to excellence and innovation in the TPRM space: Aravo Solutions : has consistently been at the forefront of TPRM innovation, offering robust solutions to manage third-party risks effectively. Ncontracts : has been a valuable partner in helping organizations streamline their vendor management processes and mitigate risks. OneTrust : is known for its comprehensive privacy, security, and third-party risk management solutions, which align with the evolving regulatory landscape. ProcessUnity : integrated risk and compliance management solutions continue to empower organizations to proactively manage vendor risks. Venminder : dedication to third party risk management has been unwavering, providing organizations with tools and expertise to enhance their TPRM programs.   What Sets VRM Groups Apart? The SPARK Matrix™ is an assessment and ranking framework designed to evaluate and rank Vendor Risk Management (VRM) solutions based on numerous factors, including capabilities, features, and performance. It aims to provide organizations with a benchmark for selecting the most suitable VRM solution for their unique requirements. While the SPARK Matrix™ is a valuable resource, we want to emphasize that it does not represent a comprehensive list of all TPRM vendors in the market. Instead, it reflects those vendors who participated in the evaluation process. The TPRM landscape is diverse and continually evolving, with numerous vendors offering specialized solutions to meet the unique needs of different organizations. Therefore, it is crucial that TPRM teams look for competitive factors & differentiators when evaluating potential technology partnerships: 1.      Tailored Solutions : Exceptional VRM groups recognize that one size does not fit all. They offer tailored solutions that align with the specific needs and risk profiles of their clients. Customization and flexibility are key. End to End Vendor Lifecycle Management to enable cost optimization, operational excellence, and growth through vendor selection, contract negotiation, vendor onboarding, vendor continuous monitoring of performance and risk management. Issue & Incident Management: to enable event identification, assessment and resolution of issues or incidents with third party vendors to maintain the security, compliance, and reliability of the vendor relationships. Compliance with Laws & Regulations: to keep organizations aligned with changing regulations and ensure that vendors comply with application laws, and industry standards. [e.g., cloud computing, APIs (Application Programming Interface), RPA (robotic process automation), cognitive automation, big data analytics, blockchains, etc.] Reporting, Dashboarding & Analytics: to provide comprehensive reporting, visualization, and analytics capabilities to business owners, risk committees, executive management and/or an organization’s board of directors.  These powerful visualizations are derived by deep insights and assist leadership in making informed business decisions. 2.      Continuous Innovation : Stagnation is the enemy of progress. The best VRM groups are constantly innovating, integrating automation, AI (artificial intelligence), and emerging technologies to improve the efficiency and effectiveness of their solutions. 3.      Proactive Risk Monitoring: The ability to proactively identify and mitigate risks is a significant differentiator. VRM groups that offer real-time monitoring and alerts are better equipped to tackle the dynamic nature of vendor-related risks. 4.      Scalability and Adaptability:  The ability to scale and adapt to an organization's evolving needs is another distinguishing factor. VRM groups that offer scalability and flexibility ensure that their solutions grow with the businesses they serve.   TPRM Teams should take note of the Technology Excellence & Customer Impact factors that each market participant was analyzed against when designing their own TPRM Service Provider analysis components:   Technology Excellence: Vendor Lifecycle Management: Ability to handle the end-to-end vendor lifecycle management process. Risk-Scoring and Assessment: Evaluate and quantify potential risks associated with vendors. Usability: Quality of a product or system in terms of how easy it is to use, learn, and navigate. Continuous Monitoring and Remediation: Actively monitor and respond to events and issues as they occur. SLA (Service level agreements) & Performance Monitoring: Outlines the level of service expected, the metrics used to measure performance, and the consequences for not meeting the agreed-upon standards. Configurability and Scalability: Ability of a system or software to be easily customized or configured and scalable to meet specific requirements without requiring extensive changes. Dashboarding, Reporting and Analytics: Insights into various aspects of the business, customer behavior, and performance. Workflow and Process Automation: Automate and streamline manual tasks and processes. Integration & Interoperability: Ease of integration with other internal modules and API-based integration with third-party data providers and partners, extent of operability with third party partners. Competition Differentiation: Set it apart from its competitors and give it a competitive advantage in the marketplace. Vision & Roadmap: To what extent does the product vision align with its buyers’ needs in terms of acquiring, satisfying, and retaining customers? Does the vision promote a strong focus on the customer and a positive customer experience? How well does the vision align with current and future customer preferences? Does the company have a clear plan in place for implementing its vision through product improvements, innovation, and partnerships within the next year? Does the company possess the necessary resources and abilities to accomplish its planned roadmap? Customer Impact Product Strategy & Performance: Evaluation of multiple aspects of product strategy and performance in terms of product availability, price to performance ratio, excellence in GTM strategy, and other product-specific parameters. Market Presence: The ability to demonstrate revenue, client base, and market growth along with a presence in various geographical regions and industry verticals. Proven Record: Evaluation of the existing client base from SMB, mid-market and large enterprise segment, growth rate, and analysis of the customer case studies. Ease of Deployment & Use: The ability to provide superior deployment experience to clients supporting flexible deployment or demonstrate superior purchase, implementation, and usage experience. Additionally, vendors’ products are analyzed to offer user-friendly UI and ownership experience. Customer Service Excellence: The ability to demonstrate vendors capability to provide a range of professional services from consulting, training, and support. Additionally, the company’s service partner strategy or system integration capability across geographical regions is also considered. Unique Value Proposition: The ability to demonstrate unique differentiators driven by ongoing industry trends, industry convergence, technology innovation, and such others. Trust the Data, Verify the Path Forward In an era where data reigns supreme, the Spark Matrix™ provides TPRM practitioners with a compass for navigating the intricate vendor landscape. The insights derived from this research empower practitioners to make informed decisions, ensuring that the partnerships they forge are not just built on trust but are also fortified by a robust verification process. Empowered by this, the practitioner is now responsible for practicing their Risk Management skills when leading their organizations forward. Resources: TPRA’s TPRM Tools List:   https://www.tprassociation.org/tprm-vendor-list TPRA’s Service Provider Profiles: https://www.tprassociation.org/service-provider-profiles SPARK Matrix™ Domain Link:   https://quadrant-solutions.com/ SPARK Matrix™ Link to the Report (Payment Required):   https://quadrant-solutions.com/market-research/spark-matrix-vendor-risk-management-vrm-q4-2023-2990     Note:  SPARK Matrix™ is NOT Sponsored by TPRA.

Most third-party risk management (TPRM) practitioners understand that managing risks associated with third parties can be like sailing a ship through sometimes dangerous waters. Just as a captain must chart a detailed course and remain alert to changing weather conditions, TPRM professionals need a straightforward strategy to navigate risks. They must continually identify, assess, and mitigate potential issues while recognizing the importance of monitoring the horizon for emerging storms that could threaten the organization or its customers.   Managing third-party risks can be challenging because these risks evolve, similar to how ocean waves change due to various factors. Effective TPRM requires proactive identification, management, and continuous monitoring of risks to prevent the proverbial ship from sinking.  Unfortunately, some organizations limit their risk monitoring solely to scheduled intervals, which undermines the goal of continuous oversight. Others take a more relaxed approach, assuming everything is fine until it isn't. Delaying monitoring until a third party faces a serious issue, such as a data breach or a significant decline in performance, puts your organization at a disadvantage. Addressing problems reactively usually leads to chaos and missed opportunities. It's like trying to repair your boat when it’s already taking on water.  So, how can your organization stay safely afloat with proactive and effective continuous monitoring? Let's delve into the essential activities within the third-party risk management lifecycle that lay the groundwork for continuous monitoring and some best practices to implement.    Foundations for effective continuous monitoring   The third-party risk management lifecycle is a blueprint for managing third-party risks effectively. Key activities in this lifecycle create a strong foundation for effective continuous monitoring.  Inherent Risk Assessments Effective risk management begins with identifying risks. A thorough inherent risk assessment allows your organization to pinpoint and quantify risks related to specific products, services, and third-party relationships. Understanding these risks—whether in cybersecurity, privacy, compliance, finance, or reputation—establishes a baseline for monitoring and identifying new or emerging risks over time.  Due diligence After identifying the risks, the next step is to assess how adequate the existing controls are in mitigating them. Experts in cybersecurity and compliance should review the vendor's documented controls to evaluate their effectiveness and identify any gaps that require additional attention in the future.   Well-written contracts Third-party contracts define the roles and responsibilities of both parties and outline the specific terms and conditions that the third party must adhere to. This includes compliance with technical, security, financial, regulatory standards, and service level agreements (SLAs).   Risk reassessment and periodic due diligence When it comes to third-party risks, it's crucial to understand that this isn't a "set it and forget it" situation. Establishing protocols for reassessing inherent risks and validating third-party controls is essential. It involves reviewing the last inherent risk assessment to identify new or changing risks and performing due diligence by collecting up-to-date vendor documentation to re-verify their controls. Best practices for continuous monitoring  While every organization is different, there are best practices for continuous monitoring that can enhance the effectiveness of your efforts.  Use a risk-based approach. Not all third-party engagements carry the same risk level, so it's essential to identify effective monitoring strategies based on risk types and amounts. Critical or high-risk relationships like cloud providers require robust monitoring, while lower-risk providers, like office supply vendors, need less scrutiny. A risk-based approach ensures resources are allocated to manage the highest risks effectively.  Monitor both risk and performance. Understanding the importance of monitoring specific third-party risks is straightforward for most practitioners. However, performance monitoring is often seen as a secondary concern. Subpar performance not only prevents your organization from receiving the value it is paying for, but it can also signal emerging or increased third-party risks. Poor performance may indicate underlying issues such as declining financial health, ineffective controls, or operational and managerial problems before they are identified through other risk assessments or periodic due diligence.  Establish and stick to formal monitoring routines. Set appropriate intervals for re-evaluating risk, due diligence, and performance reviews. Document and publish these routines and ensure stakeholders are accountable for adhering to them. Increase monitoring when necessary. It's reasonable to increase monitoring when issues with third parties arise or performance declines. It may also be necessary due to declines in financial health, data breaches, or regulatory changes.  Consider using risk intelligence tools to assist your monitoring efforts. Continuous monitoring requires daily vigilance to detect changes in a third party's risk profile. But, depending solely on internet news alerts or third-party vendors for daily updates can be risky. Instead, consider utilizing subscription-based risk intelligence services to receive targeted alerts regarding changes in your third party's cybersecurity, financial health, compliance, reputation, and industry developments.   In conclusion, third-party risks are constantly changing, and organizations that want to manage them must engage in proactive, continuous monitoring to identify potential threats and reduce their impact on the organization and its customers. By following the third-party risk management lifecycle and implementing best practices for continuous monitoring, your organization can more effectively navigate the complexities of third-party risks and prepare for upcoming challenges.

Third party risk management (TPRM) is a comprehensive process that involves identifying, assessing, managing, and continuously monitoring the risks faced by your organization and its customers due to business relationships with external vendors, suppliers, and service providers. In the past few years, TPRM has evolved beyond just managing direct relationships with your third parties; it now also includes identifying, assessing, and mitigating risks related to fourth-party or Nth-party relationships—essentially, the vendors of your vendors and beyond. This layered approach is crucial, as risks within the supply or service chain can propagate through your third parties, potentially impacting your organization unexpectedly. Common risks include information security vulnerabilities, operational disruptions, compliance issues, financial concerns, and reputational risks.  To illustrate what fourth and nth party relationships are, imagine your organization is utilizing a third party customer service call center experiencing an outage with its call management software provider (your fourth party). Even though you do not have a contract with the vendor providing the call management software, this outage can still lead to operational disruptions for your organization, resulting in service delays and dissatisfied customers. Consider another scenario where that same software provider suffers a data breach from their contracted data center (your Nth party), ultimately impacting your customers' data. In both situations, the issues do not originate directly from your third party, but rather from their vendors (and the vendors of those vendors) who are engaged to deliver products and services to your organization.   Just thinking about fourth and nth-party risks can be overwhelming, especially as the risk landscape seems to grow with each additional layer of a relationship. And many regulatory requirements now include effectively identifying and managing these risks. However, there is no need to panic. There are effective strategies you can implement to address them, even with limited resources.  How To Manage Fourth- and Nth-Party Risks  It's essential to recognize that managing all fourth-party and nth-party risks is neither feasible nor practical. Your organization has limited time and resources. And, you do not have direct contracts with these fourth and nth parties, so they are not legally obligated to you. Furthermore, your visibility into their operations may be limited, making oversight difficult. A strategic approach is essential, so defining what "managing" these risks entails and how it is implemented in practice is important. For many organizations, this means identifying where fourth-party and nth-party risks exist and ensuring that the third party manages those extended relationships effectively.   Consequently, having strong third party risk management practices at your organization is crucial for success. This includes conducting thorough risk assessments, assigning risk ratings, identifying critical vendors, performing due diligence, establishing contracts, and implementing continuous monitoring. These processes are vital for effectively identifying and managing fourth-party and nth-party risks.  Take a stepwise approach and start with your own critical third party vendors and service providers. Critical third parties are those relationships that can seriously impact your operations if there should be a business interruption. Critical third parties are those that access, process, transmit, or store Personally Identifiable Information (PII) or confidential data, or any vendor or service provider that interacts with your customers. Targeting your critical third parties first can help you narrow your scope and concentrate on where the most significant risks are.   Build your 4th and nth party inventory  Once you have your list of Critical third parties, you’ll need to understand which of their vendors and service providers are essential for delivering products and services to you, or those that could cause regulatory issues or customer dissatisfaction.  Here are some tips for accomplishing that task.  Ask your third parties to list their critical vendor and service provider relationships.  This should be a requirement in your critical third party contracts, but if it isn’t, schedule a meeting to discuss your objectives and criteria so they can report back to you. Ensure they provide the organization’s name, location, and product or service. It’s also important to ask if they have additional relationships through their vendors (your nth parties) that can impact your organization or its customers.  Check your critical vendors’ third party SSAE 18 (SOC reports)  to find relevant fourth-party vendors. Look in the “Subservice Organizations” section for this information. These vendors provide the controls needed to meet your third party’s system requirements or commitments to you.  After you have identified these fourth and nth party relationships, keeping the inventory current and organized is essential. Remember to look for fourth and nth parties servicing more than one of your third parties. For example, if all your cloud, data, and analytics providers are using AWS, you may need to consider and address that additional nth-party concentration risk.  Review Your Vendor’s TPRM Policy And Practices  You must rely on third parties to effectively manage their vendor and service provider relationships. A key aspect of successfully addressing third party risk is understanding how your vendors and service providers are managing their third party risks. Never assume that they have it under control. You must see evidence that their TPRM practices meet your requirements. Always review the following:  Policy : Review their internal third party or vendor risk management policy. Is it comprehensive? Does it clearly outline roles and responsibilities? Who is ultimately accountable for TPRM? Does the policy address each part of the TPRM lifecycle?  Risk assessments: Request their inherent risk assessments, risk ratings (including the methodology for rating), how they define critical risks, and the frequency of risk assessments conducted.  Due Diligence : Request real examples of due diligence conducted on critical third parties and review the vendor risk control assessments provided by qualified subject matter experts.  Contracts: Understand if minimum contract terms and conditions are utilized to reduce or mitigate risks. Ensure that there are legally binding contracts that are managed appropriately for critical 4th and nth parties. Ongoing Monitoring : Ask about their requirements for ongoing monitoring. Confirm if they are performing both risk and performance monitoring for their vendors. Ask for proof of monitoring and see if there have been any incidents or performance failures. Issue Management : Inquire about the processes for managing issues, which include reporting, remediation, and escalation related to TPRM. When you understand how your third parties manage vendor relationships and can see proof of effective and timely processes, you will be able to address nth-party risk more confidently.  Update your contracts  It is essential to recognize that your organization relies heavily on third parties to identify and manage risks associated with fourth and nth parties. If your current third party contracts do not require the disclosure of critical nth parties or do not include provisions for managing third party risks, it may be time to amend those contracts. If immediate changes aren't feasible, it's crucial to document the necessary improvements so your organization can effectively negotiate them before renewing the contracts.  Monitor nth party risk.  Like other risks, you need to stay aware of third-party and fourth-party risks that could impact your organization or its customers. You should require your third party vendors to provide monitoring information about their vendors and service providers, and review this information regularly, especially if any issues have arisen. Ensuring that you receive proof of remediation for these issues is essential. Additionally, consider utilizing risk intelligence services to monitor critical or high-risk fourth and nth parties.  In conclusion, although addressing fourth and nth-party risks may seem complex, they become more manageable with a strategic approach. By focusing on your critical third parties, building an inventory of their essential vendors, and requiring them to uphold robust TPRM practices, you create a solid framework for proactively identifying and mitigating risks. Committing to continuous monitoring and maintaining open communication with your third parties will enable you to identify and address the risks in your service or supply chains more effectively.

Compliance doesn’t wait—and neither should you.   Regulators aren’t sitting idle, and neither are the risks buried in your third-party ecosystem. As more organizations outsource critical services, the scrutiny around how those relationships are managed has grown sharper, faster, and more complex. Vendor oversight is no longer a back-office function; it’s a frontline defense in your regulatory playbook.  Whether it’s cybersecurity, consumer privacy, operational resilience, or responsible banking, compliance expectations now extend well beyond your own four walls. They travel with your data, systems, and customers straight into the hands of your vendors.  So, how do you keep pace without burning out your risk and compliance teams? By treating regulatory alignment as an active, continuous part of your third-party risk program, not a once-a-year fire drill. The good news? You can get ahead of the curve and stay there with the right approach.  Here are five practical strategies to make that happen:  1. Know the Rules—And Where They Apply  You don’t need to memorize every regulatory acronym, but you do need a solid grasp of which ones affect your third-party relationships. That includes direct regulations like:  GLBA, if your vendors access customer financial data.  HIPAA, if they touch health records.  GDPR and CPRA, if you’re dealing with global or California-based personal data.  Plus, there is a growing patchwork of cybersecurity and operational risk standards like NIST, OCC, and FFIEC guidance.  Start with a risk-regulatory mapping exercise. Connect the dots between your critical vendors, their services, and the applicable laws or guidance. Then build a compliance checklist for each category, so you're not scrambling the next time a regulator wants evidence.  2. Make Compliance Part of Your DNA, Not Just a Checkbox   You're likely missing something if your due diligence templates haven’t changed in the last 18 months. Regulatory expectations evolve, and your assessment process should too.  That means asking smarter questions and requiring supporting evidence. A “yes” on a self-assessment doesn’t cut it anymore. Ask for:  Recent SOC reports, penetration tests, or certifications (ISO 27001, PCI-DSS).  Policy documents that reflect specific regulatory controls (like data retention or breach notification).  Contractual language showing compliance with laws like GDPR or HIPAA.  If a vendor claims they’re compliant, they should be able to show you how. And if they can’t? That’s a conversation worth having before an examiner starts asking the same question.  3. Monitor, Document, Repeat  Initial due diligence is only the starting point. Regulatory compliance should be present day-to-day, not just during onboarding.  Set up a monitoring cadence that makes sense for the risk level, quarterly check-ins for your critical and high-risk vendors, and annual refreshes for the rest. Don’t wait for a contract renewal to find out if a vendor has changed sub-processors, moved data centers, or had a cyber event.  Key actions to build into your process:  Trigger-based reviews (e.g., regulatory changes, vendor incidents, service scope shifts).  Control monitoring, especially for data privacy, cybersecurity, and financial controls.  Evidence logging, saving emails, reports, certifications, and attestations. Document as you go, not in hindsight.  Well-organized documentation is not only essential during audits but also demonstrates that your program has meaningful substance.  4. Use Frameworks—and Foundational Guidance—as Your North Star   You don’t need to start from scratch. Established frameworks and regulatory guidance provide the scaffolding your program needs to stay aligned, scalable, and defensible. Used well, they’re more than checklists—they’re strategic tools that guide smart decision-making and help you demonstrate maturity.  A strong foundation starts with the Interagency Guidance on Third-Party Relationships: Risk Management ,  issued by the OCC, FDIC, and Federal Reserve. This guidance outlines key lifecycle elements—planning, due diligence, contract structuring, ongoing monitoring, and termination—and serves as a gold standard for banks and any organization managing critical vendor relationships.  Not a financial institution? The Third Party Risk Association provides the standard for Third Party Risk Management in their free, comprehensive  TPRM 101 Guidebook  that will walk you through all phases of the TPRM lifecycle in detail and provide you with practical tools, tips, and examples for its implementation.  Once that foundation is established, you can layer in frameworks tailored to your specific risk domains and industry. For example:  Financial Services :  Use the FFIEC Cybersecurity Assessment Tool (CAT)  to benchmark third-party cyber risk, and align your broader program with NIST 800-53  or the NIST Cybersecurity Framework (CSF)  to strengthen control mapping and monitoring.  Healthcare : Look to HIPAA Security and Privacy Rules   when evaluating vendors handling protected health information (PHI). Ensure Business Associate Agreements (BAAs) are in place—these are legally required contracts that outline each party’s responsibilities when handling PHI and help ensure HIPAA compliance. Vendor controls should also align with HITECH Act  provisions.  Insurance: Frameworks like NAIC Model Laws  and Guidance on Third-Party Administrators (TPAs)  help shape due diligence expectations, especially for claims processors, brokers, and customer data handlers.  Technology and Software Supply Chain : Adopt software-specific frameworks like SLSA (Supply-chain Levels for Software Artifacts )  and the NIST Secure Software Development Framework (SSDF)  to manage risks from open-source components, CI/CD pipelines, and outsourced developers.  Cross-Industry or Global Operations : To scale assessments across geographies and vendor types, use certifications like ISO 27001 . The goal here isn’t to follow all  frameworks—it’s to select the ones that make sense for your organization, risk profile, regulatory exposure, and operational reality.    By combining lifecycle-based regulatory guidance with targeted frameworks, you build a tailored and resilient TPRM program. This shows regulators, auditors, and your own leadership that you understand not just the “what” but the “why” behind your oversight approach.    Proactive risk programs stand out by effectively anticipating potential challenges and implementing strategic measures to mitigate them before they escalate.  5. Make TPRM Everyone’s Business   Even the best-designed compliance framework will fall apart if no one uses it. Training and communication aren’t optional—they’re how you operationalize your program.  Risk and compliance teams can’t do it alone. Your business stakeholders need to understand:  When a vendor relationship triggers regulatory requirements.  What documentation or approvals need collection.  How to recognize and escalate red flags.  Keep it simple, repeatable, and relevant. Offer live sessions, recorded refreshers, or just-in-time guidance during intake or onboarding. Compliance works best when built into the workflow, not bolted on as an afterthought.  Final Word: Stay Ready So You Don’t Have to Get Ready  Proactive regulatory compliance isn’t about predicting the future but building the muscle to adapt. When your program is designed to flex, monitor, and evolve, you’re not just reacting to audits or enforcement actions. You’re leading with confidence, clarity, and control.  And that’s what true TPRM maturity looks like.  MEMBER EXCLUSIVE  To learn more on this topic, watch our June TPRM Webinar, “Staying Compliant: Proactively Addressing New Regulations.” This roundtable focused on proactive strategies to navigate the dynamic regulatory landscape impacting third-party risk management.   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.

If you're tired of scrambling for documentation, chasing down vendors for evidence, or rewriting the same compliance answers every exam cycle, this is for you. This one-page infographic is built with real TPRM pain points in mind: inconsistent monitoring, reactive audits, evolving regulations, and the pressure to prove your program’s worth with limited resources. It distills five actionable strategies into a visual format you can actually use—with your stakeholders, during training, or as a north star for revamping your vendor oversight. You’ll find guidance on mapping regulations, upgrading due diligence, monitoring with intention, and embedding compliance into your daily operations, not just during audit season. Because real TPRM maturity isn’t about checking boxes—it’s about building a program that works when things go wrong. This infographic helps you start there. Perfect for sharing with your team, your boss, or anyone who still thinks compliance is a once-a-year event.

Introduction   In the modern business landscape, Third-Party Risk Management (TPRM) has become a focal point for organizations aiming to safeguard their operations. While much attention is given to assessing and managing the risks associated with third-party vendors using questionnaires, Boards of Directors are asking CISOs what the business is doing to protect the organization from third parties. Access Management in Complementary User Entity Controls (CUECs) is a crucial internal control often overlooked by TPRM when performing asses sments. Additional access protections are available through the organization’s implementation of a Zero Trust strategy  and utilizing Artificial Intelligence (AI) and Machine Learning (ML) applications.  Access Management in Complementary User Entity Controls (CUECs)  CUECs represent the controls that service providers expect you (as the customer) to implement to complement their own control environment. In the context of third-party management, these controls are crucial for maintaining a secure and effective relationship. Critical access management CUECs that organizations often overlook when managing third parties include the following:  Access provisioning and deprovisioning controls : According to a Black Kite study, 54% of all third-party breaches were due to unauthorized network access. ( 1) Monitoring of third-party activities : According to a Ponemon Institute study, only 34% of organizations effectively monitor third-party access to critical systems. (2)  This creates significant blind spots in security posture. Regular reassessment of third-party access needs : A Wiz Research study indicates that 82% of companies unknowingly provide third-party vendors with highly privileged roles. (3) Validation of CUEC controls : Conventional CUEC validation, if performed, focuses only on control existence and design effectiveness but not control operation and operating effectiveness, creating a false sense of security. Access Management in a Zero Trust Strategy  Zero Trust is fundamentally about “never trust, always verify” – a principle that can significantly enhance the protection of an organization's network and systems when granting third-party access. The implementation of Zero Trust requires a shift away from the traditional security models that rely on perimeter defenses and instead focus on securing individual assets and data. Traditional models grant broad network access once a user is authenticated; however, Zero Trust gives only the minimum access needed for a task. (4)  Zero Trust identity and access management controls are implemented using a risk-based approach and may include the following:  Multi-factor authentication (MFA): Third-party users are required to authenticate using at least two factors (something they know, have, or are). According to Roger Grimes, Data-Driven Defense Evangelist at KnowBe4, MFA can stop 30% to 50% of account compromise attacks. (5)   Just-in-time (JIT) access: Third party users are provided temporary, time-limited access only when needed rather than persistent access. This minimizes the potential for attackers to exploit vulnerabilities and gain unauthorized access. Privileged access management (PAM): Session recording and monitoring is implemented   for all third-party privileged access. According to Gartner, organizations that implement PAM can reduce the risk of privileged credential abuse by 75%. (6) Micro-segmentation: Third-party access is limited to only specific network segments or applications required for their function. By isolating critical systems and sensitive data, detecting and responding to threats becomes easier. Device posture assessment: The security posture of third-party devices is monitored before granting access. Third-party devices must meet minimum security requirements (patches, endpoint protection, etc.) Leveraging Artificial Intelligence (AI) and Machine Learning (ML) in a Zero Trust Strategy  Organizations using AI-powered security tools have an 85% success rate at predicting cyberattacks. (7)  Examples of AI and ML applications used in a Zero Trust strategy include the following:  Anomaly detection: AI and ML algorithms can be trained to detect unusual patterns or behaviors within the organization’s network. Deviations from normal activity may indicate potential security threats, for example spikes in access requests from unfamiliar locations may trigger alerts for further investigation. (8) Behavioral analysis: ML models can analyze user behavior and establish a baseline of normal activities for each user. Any deviations from these patterns can raise flags for potential insider threats or compromised accounts. (8) Threat intelligence integration: By analyzing threat intelligence feeds alongside internal network data, organizations can make more informed decisions regarding access control and threat mitigation strategies. ML algorithms can prioritize and contextualize threat intelligence data, helping security teams focus on the most critical risks. (8) Adaptive access controls: ML-driven access control mechanisms can dynamically adjust permissions based on real-time risk assessments. By continuously evaluating factors such as user behavior, device health, and network conditions, these systems can grant or revoke access privileges dynamically. (8) Case Studies   Case Study 1:  Implementing Complementary User Entity Controls in a Retail Environment  A leading retail company implemented Complementary User Entity Controls to enhance its third-party risk management. This involved establishing strict access controls and clear usage policies for third-party vendors accessing its systems. By doing so, the company improved its ability to detect and respond to unauthorized access attempts, significantly reducing the risk of data breaches. The implementation of these controls also led to better accountability and adherence to security protocols among third-party vendors.    Case Study 2:  Adopting Zero Trust Controls in a Technology Firm  A technology firm adopted a Zero Trust strategy to manage third-party access to its network and critical systems. The approach required verification of every access request, regardless of the source, and continuous monitoring of user activities. By using multi-factor authentication and least-privilege access principles, the firm ensured that only authorized users could access sensitive data. This strategy not only prevented unauthorized access but also provided granular visibility into third-party activities, enabling proactive threat detection and response.  Conclusion  While third-party assessments remain a cornerstone of TPRM, it is essential to recognize and implement broader access controls that contribute to a more comprehensive risk management strategy. By validating both the design and operating effectiveness of critical access management CUECs and implementing Zero Trust access controls, organizations can enhance their resilience and better protect themselves against the myriad risks associated with third-party relationships. AI and ML applications can also play a crucial role to ensure access controls remain robust and responsive to evolving threats. TPRM is not just about the third party; it is about creating a holistic approach to risk management that safeguards the organization from within and beyond.    References:   Black Kite, “Third-Party Breach Report” Vol.5, 2024. [Online]. Available: https://blackkite.com/wp-content/uploads/2024/03/third-party-breach-report-2024.pdf .   Imprivata, “Imprivata Study Finds Nearly Half of Organizations Suffered a Third-Party Security Incident in Past Year,” February 13, 2025. [Online]. Available: https://www.imprivata.com/company/press/imprivata-study-finds-nearly-half-organizations-suffered-third-party-security .    Security Magazine, “82% of companies give third parties access to all cloud data,” January 26, 2021. [Online]. Available:  https://www.securitymagazine.com/articles/94435-of-companies-give-third-parties-access-to-all-cloud-data .    Cipher, Alex, “Zero Trust: Redefining Cybersecurity,” 2024  Cybercrime Magazine , “Mult-Factor Authentication is (Not) 99 Percent Effective,” February 23, 2023.   [Online] . Available:   https://cybersecurityventures.com/multi-factor-authentication-is-not-99-percent-effective/ .  CTO (Core Team One),   “Did you know? 74% of data breaches start with the abuse of privileged credentials,”  Wednesday, 12 June 2024. [Online]. Available:   https://www.bing.com/search?pglt=297&q=74%25+of+data+breaches+start+with+the+abuse+of+privileged+credentials&cvid=5411e708f64447b8b8e91782242cba48&gs_lcrp=EgRlZGdlKgYIABBFGDkyBggAEEUYOTIGCAEQRRg80gEKMTYxMzY2ajBqMagCALACAA&FORM=ANNTA1&adppc=EDGEBRV&PC=EDGEBRV .   Furness, Dylan, Emerj, November 9, 2024. [Online]. Available:  https://emerj.com/an-ai-cybersecurity-system-may-detect-attacks-with-85-percent-accuracy/#:~:text=An%20AI%20Cybersecurity%20System%20May,Accuracy%20%7C%20Emerj%20Artificial%20Intelligence%20Research .   Goraga , Zemelak, Dr., “AI and ML Applications for Decision-Making in Zero Trust Cyber Security,” Volume 1, SkyLimit Publishing, 2024, p. 2-3

From the Federal Financial Institutions Examination Council (FFIEC)

This video covers Reporting on Residual Risk , the 7th section of Pre-Contract Due Diligence , which is the second phase of the TPRM Lifecycle. Explore how to effectively report and communicate residual risks to decision-makers as the final step in Pre-Contract Due Diligence.