TPRM challenge: Evolution to Full Scope Continuous Monitoring
In this blog series, we discuss four key third-party risk management challenges for 2022. Last week we talked about the increasing impact of third-party incidents. This week: the evolution to full scope continuous monitoring.
Managing third-party risk through the relationship lifecycle involves capturing material changes once the third-party has been onboarded and limiting potential failures in the due diligence process. This end-to-end TPRM process enables the organization to execute a more proactive and full scope assessment and monitoring model.
Organizations that can effectively expand the scope of their TPRM process find it significantly easier to be resilient in times of uncertainty. Expanding the scope spans across three major categories:
1. Expanding entity scope
This is covered in our previous blog which talks about including full scope of the third- and fourth-party entities.
2. Expanding thematic scope
The thematic scope set and expected by regulators and society is expanding. While regulators only require a process for managing risk for material third parties, expectations from other stakeholders drive interest beyond just the largest exposures. Additional efforts are observed to cover broader topics like ESG that is well known to be a source of significant reputational risk.
3. Expanding operational scope
Since the impact of risk from third-parties is wide reaching, a comprehensive collaboration between a broader set of enterprise operations is needed. At present, most TPRM programs align with a limited number of internal functions (e.g., Procurement or Security). Other functions often operate more in silos and are therefore not communicating with each other, leaving an organization unaware of the collective view of risk.
Expanding the scope with the categories helps drive enterprise-wide compliance of external parties within the bounds of an organization’s needs and contractual obligations. This is however not a trivial task and simply adding more human resources to the mix is not scalable. The increasing complexity of available data inside and outside the organization opens the risk of human error. To effectively execute this newly transformed enterprise wide TPRM program requires investment in core.
Want to know more?
In this blog, we discussed the evolution to full scope continuous monitoring. This is one of the four key challenges we investigate in our white paper ‘The Role of Technology & Data in Addressing 2022’s TPRM Challenges.’ Want to read about the other challenges and how technology adoption can be a cornerstone strategy to address them? Download our white paper!
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