Choosing a Third-Party Risk Management (TPRM) Platform

The recent tightening of operational resilience regulations in the UK, and the EU's Digital Operational Resilience Act (DORA), have drawn attention to the operational threats posed by third parties - especially software and IT providers, which lie beyond an organisation’s direct control.

As a result, procurement and compliance teams increasingly see efficient third-party risk management as essential for maintaining organisational integrity and compliance.

For many businesses this means buying and implementing a Third-Party Risk Management (TPRM) platform.

TPRM platforms enable organisations to identify, assess, manage, and mitigate the risks presented by third parties to their operations, compliance, security, and reputation. Such platforms not only allow pre-emptive risk evaluation before forming new relationships, but also provide continuous monitoring of risks throughout a partnership.

What are the core features of a TPRM Platform?

A robust TPRM platform comes with a wide range of features that make managing third-party risks more efficient and effective.

One of these is the inclusion of configurable due-diligence questionnaires. These are seamlessly embedded into the system and automatically sent to third parties when needed. The information gathered from them, along with data from public databases, watchlists, and internal systems, kickstarts the screening and due diligence process. Platforms can automatically assign risk scores based on the data collected, giving a clear picture of the third party's risk profile.

Continuous monitoring is another crucial feature. Once third parties are onboarded, the platform continuously screens them against watchlists to track any changes in their activities. This ongoing surveillance ensures that potential risks are promptly identified and managed. The platform also prompts third parties to recommence the full screening and due diligence process when their current status nears expiration, keeping everything up to date.

When it comes to reporting, TPRM platforms provide an assortment of tools which might include comprehensive data visualisation, dashboards, and detailed reports on third-party risks. These tools help organisations stay compliant with regulatory requirements and make informed decisions based on real-time data.

Automated workflows and approval processes add another layer of efficiency. Platforms use conditional logic to trigger specific actions based on an assigned risk level. For instance, a high-risk third party might automatically be taken through a more extensive multi-step approval process.

TPRM tools can integrate with other applications, such as Enterprise Resource Planning (ERP) systems, to provide a comprehensive view of risks across an entire organisation. Another example of integration is the use of data feeds like Refinitiv and Dow Jones to enrich the risk assessment process.

How to choose the right TPRM Platform

So what should you focus on when selecting a TPRM platform? As part of a structured vendor selection process, we advise clients to consider the following:

Internal alignment on requirements: Before you get too far down the line, ensure that your organisation has agreed the desired technical and functional requirements, to identify the most suitable solutions.

System integration: Assess the prospective tool's ability to seamlessly integrate with existing systems, such as ERP cloud applications.

Flexible risk assessment models: Choose a platform that allows for customisable risk assessments aligned with your organisation's specific frameworks and criteria.

User-friendly interface: A simple and intuitive interface facilitates ease of use and encourages widespread adoption.

Vendor support: Evaluate the vendor's support model for responsiveness and reliability during the RFP process.

Vendor reputation: Consider the vendor's reputation by reviewing feedback and their track record to ensure a reliable and effective solution.

Cost: Ensure the platform fits within your budget while meeting all defined requirements.

Automated workflow features: Look for tools that offer automation for data collection, due diligence questionnaires, and continuous monitoring to save time and improve efficiency.

The right TPRM platform can greatly improve one’s ability to manage third-party risks effectively. By focusing on these key features and considerations, organisations can enhance their risk management processes, ensuring robust compliance and safeguarding their reputation.

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