Understanding how procurement risk ties in with third-party risk

RiskXchange is a respected provider of cybersecurity ratings and can fully assess third-party risk factors.

Third-party risk is the potential threat that arises from organisations relying on third parties to perform activities or business services on their behalf. Risk can be evident in many different ways, from threat to an organisations’ customer and employee data, to financial information and overall operations.

Procurement risk relates to the potential for failure within the procurement and supply chain process. Risks include compliance, quality, fraud, cost and delivery risks. It’s become clear that third-party risk goes hand-in-hand with procurement risk.

Supply chain disruptions can make or break a business. In order to combat the threats, visibility into your vendors’ external business environments and internal processes is key. It’s important to identify the risks, understand them in relation to your business, then act to reduce the threat.

The link between IT security and procurement is crucial to pinpointing threats and assessing the risks. Using this intelligence is key to understanding third-party risk factors and securing your business. It’s also important to bring on-board a company like RiskXchange to introduce third-party risk programs and help your business protect itself against potential threats.

Third-party risk management

Third-party risk management (TPRM) focuses on cyber risk and controls for protecting sensitive data but ignores other risks that can be damaging to a business. Let’s take a closer look at the additional risks:

  • Financial instability can affect a vendor’s ability to deliver goods and services.
  • Violations or regulatory breaches could indicate future legal challenges.
  • Leadership change can signal a strategy shift that could impact products and services.
  • Inadequate environmental, social and governance (ESG) practices can signal problems.

Failure to assess the above-mentioned points can result in a short-sighted view of the vendor. Without this type of data in your vendor risk assessment it could lead to inconsistencies in evaluating vendors, limited pre-contract visibility which obscures potential risks, and delays in onboarding.

How to manage third-party risk

It’s important to have a solid playbook for coordinating your organisation’s team to reduce risk throughout every stage of the third-party lifecycle – from sourcing and selection to onboarding and offboarding. Here are the top five pointers to follow:

  • Ensure that you screen vendors against a wide range of risks.
  • Make sure everyone is operating from the same playbook. Centralise all data and risk analysis so that it can be shared with the team and they can act.
  • Utilise inherent risk scoring and tiering to customise risk evaluations.
  • Continuously monitor vendors so that you have real-time data to make the best decisions.
  • Create a unified set of metrics to determine success and failure so they can be acted upon by the relevant members of the team.

What’s next?

Ensuring IT security teams and procurement are working from the same playbook is key to third-party risk management. Operating in this way builds better intelligence, stronger contract negotiations with partners, enforceable vendor accountability and faster assessments.

How RiskXchange can help

RiskXchange is one of the firms leading the fight against cybercrime, coming up with novel solutions to everyday problems experienced at the hands of hackers. We are a respected provider of cybersecurity ratings and can fully assess third-party risk factors.

With full visibility over your eco-systems’ entire attack surface in near real-time, you can regularly monitor and mitigate risks to prevent unnecessary exposures. Our passive data collection methods are effective and have no impact on your network performance. Using data-driven insights to prevent breaches is the best way to reduce an attack surface and prevent cyberattacks. 

About RiskXchange

RiskXchange provides a powerful AI-assisted, yet simple automated and centralised 360-degree cybersecurity risk rating management approach. We generate objective and quantitative reporting on a company’s cyber security risk and performance, which enables organisations with evolving business requirements to conduct business securely in today’s open and collaborative digital world.

  RiskXchange is an information security technology company, which helps companies of all sizes fight the threat of cyber threats by providing instant risk ratings for any company across the globe. RiskXchange was founded and is led by recognised experts within the security industry, who have held leading roles within companies such as IBM Security.

Slide Click Here Get your free risk score Gain access to valuable insights into your cybersecurity posture and prevent security breaches effectively.