In today’s reading we will talk about third party risk, something that every company is exposed to, due to the relationship it may have with partners, suppliers, investors or contractors, to name a few. Unfortunately, any relationship with third parties involves a risk factor, so it is important to be able to mitigate them in order to avoid violations.
A good third party risk management will be one that identifies and deals with the eventualities that may affect us both at a business and personal level. Because let us remember that the responsibility for mismanagement will fall on the person or persons acting as legal representatives, whether they are responsible or not.
By taking mitigation measures to the extreme.
It is common in some companies for third-party risk management to be applied to people or companies outside the organization’s circle, leaving out the company’s own personnel, which is due to internal control and, in some cases, to regulations subject to sanctions. The reality is that any person, directly or indirectly related to our company, must pass through the magnifying glass.
But is third-party risk management only for large companies? The answer is NO, since small or medium-sized organizations are more vulnerable to the impact of a third party’s conduct or lack of foresight, which can lead to crimes such as fraud, bribery, fraud, and even being affected by external corruption structures.
Basic principles.
If you do not have a formal third-party risk management program in place, you can start with some basic actions to minimize potential problems.
Categorize and prioritize third parties
The group of suppliers, partners or investors is usually a group of high-risk third parties. For this reason, we must individually study the role they play directly with our organization and establish how much we want to share with them, both physical and virtual, which also includes sensitive information, confidential business information, data, etc.
To have professionals specialized in risk management
In many cases the company with a specific need is in charge of training people to provide specific solutions, including risk management. The processes to be implemented, and their effectiveness, will be directly related to the capacity and training of the professionals in charge.
Another important point is also related to the recruitment of suitable profiles for the jobs or internal movement by merit. In this case, each member of the company must be trained for the position and be familiar with the normal and formal processes, especially in purchasing or contracting services.
Cover all angles
The saying “don’t put your hands in the fire for anyone” is very true, for this reason you should pay attention and focus your management on all possible risks. This includes information security and data protection risks, reputation, judicial situations, interruption in the chains essential to the company are some of the threats through a third party.
We cannot fail to mention the impact of sanctions and the severity with which infractions are punished. If the circle of third parties have problems in fulfilling their commitments, or do not have internationally accepted codes of ethics and conduct, you can be sure that the organization will have a lot of problems.
