What You Need To Know About Third Party Risk Management

risk management

There are many businesses that cannot stand alone, hence hiring third party entities are necessary. Regular employees, like Marika Tolz, are not part of the so called third party as they are part of the company itself.

When dealing with third party entities, it is important that you know how to minimize risk working with them. To further clarify, these third parties are the suppliers, contractors, partners, service providers, and vendors. They are companies, institutions or businesses that are not part of the company itself. They are a different company partnering with your company for whatever reason it may serve.

Although they are considered as “partners”, there are risks that can be associated with working with them. Of course, as the company owner, you have to make sure that your company’s integrity, assets and reputation are secured despite the fact that you are seeking help from third party entities.

When partnering with third parties, you have to make sure that you have a strong risk management policy in place. Without it, there is a huge chance that your business will fall down not because of your process mishaps but because you worked with the wrong third party company and business.

Just to make things easier for your business, here are some of the things to consider when considering third party risk management:

  • Know the third party’s portfolio

To make sure that all decisions are right and towards your business benefit, you have to check on the third party’s portfolio before doing business with them. You have to know the company or business’ reputation in the industry they are working with.

The third party’s portfolio should match your business portfolio to make sure that partnership will go well and steady.

  • Take time choosing the right partner to deal with

Choosing a third party company to work with should not be done in a snap. You have to take as much time as possible, and you have to choose accordingly. There are hundreds to thousands of companies who are offering the business you need, with this, it is only best if you take the time choosing the right company to do business with.

There are some companies who rush, and with this, they end up with the wrong company. Their security may not get bridged but the company they chose is not capable of providing the actual service they need.

  • Third party risk is not only limited to just cybersecurity

Do not focus on just cybersecurity, as that is not only where risk may occur. Apart from cybersecurity, which is actually the most prominent as of this time, there are other risk factors to consider like privacy risk, performance risk, compliance risk, ethical risk, geopolitical risk and so on.

  • Work with a contract

Even how reputable the third party company you are planning to work with, make sure that a contract is in place. Through the contract, you are guaranteed that your business welfare is preserved all throughout your business relationship with the third party company.

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