The Differences Between a TPRM and GRC Platform and Why You May Need Both

During the last decade, the intensified focus on managing corporate risk has increased the need for risk management tools, especially for organizations in regulated industries. Naturally, companies want to streamline processes, eliminate redundancies and reduce costs. If you already have a third-party risk management (TPRM) platform and/or a governance, risk management & compliance (GRC) platform, you might wonder if you actually need both. When faced with eliminating platforms or integrating all the risk processes under one system, some fundamental considerations should factor into your decision.

Primary Purposes of TPRM and GRC

Third-party risk management is the practice of identifying, assessing, mitigating and managing specific risks to an organization because of its use of external third parties to provide products or services. It’s a highly complex combination of subprocesses requiring constant and consistent execution. For every vendor coming into the organization, there are many considerations, risk assessments, reviews, monitoring and other necessary activities that must be executed with precise timing.

Third-party risk management platforms are best used for the following reasons:

1. To keep a detailed inventory of external vendors and their risk in multiple risk categories
2. To facilitate risk remediation and management while supporting the processes for monitoring those vendors' performance
3. To ensure all of this activity happens at timing specific to the contract execution or renewal

Governance, risk management & compliance are three related facets that affect the organization's ability to reach its business objectives. GRC platforms typically combine these three areas to ensure a single source of control data and reduce redundant reporting and risk remediation actions.

GRC platforms are best utilized to:

1. Identify internal risks related to strategy, processes, technology and people while operating under external rules and regulations.
2. Assess how those internal risks are presented across the enterprise by removing business management and information silos
3. Promote appropriate ethics and values within the organization
4. Map policies to regulations

Why You May Need Both a GRC and TPRM Platform

Understanding that GRC and TPRM have different objectives may be the most apparent reason you may need separate tools and platforms. However, you may just as easily surmise that GRC and TPRM both exist to manage risk, so why not have a single platform?

The answer lies in the common misconception that third-party risk management is just another subset of risk, easily covered under a broader enterprise risk umbrella. A third-party or vendor risk management program can report up through an ERM department just as easily as to an IT department. However, to be accomplished effectively, TPRM should be considered a unique risk discipline that requires its own set of tools.

Consider a chef's knife vs a surgeon's scalpel; both are knives, but you wouldn't chop vegetables with a scalpel nor perform heart surgery with a chef's knife. Both tasks indeed require a similar sharp tool. While you could arguably chop vegetables with a scalpel, the outcome of a delicate surgery performed with a kitchen knife seems even less appealing. The conclusion is that no single tool can satisfactorily accomplish both tasks, no matter how sharp it may be. Using this example, one could be accused of oversimplifying the issue. Still, while both TPRM and GRC may have similar purposes, they have very different objectives to meet for the organization.

Often vendor risk management teams are understaffed, under-resourced or non-existent. TPRM is frequently considered a part-time responsibility vs. a full-time role. But, many GRC tools seeking to integrate TPRM into their offering have not yet mastered a platform that adequately addresses the numerous sub-processes and workflows required for the TPRM practice.

A SaaS third-party risk management tool designed to facilitate the vendor risk management lifecycle and manage the complexity of risk identification and assessment during each stage of that lifecycle is an essential tool for the vendor risk manager to economize the time necessary to accomplish those tasks. And in a "time is money" world, anything enhancing our efficiency enhances the bottom line. It's not just about the money; it’s about having systems and platforms that do the work they're designed to do.

Overview of What Each Platform Is Designed to Do

To better understand the differences, let’s dive a little deeper into what a GRC platform and a TPRM platform are designed to do.

GRC systems are made to:

• Help the organization synthesize regulatory requirements into action items
• Serve as a scheduling platform for both internal audit and compliance departments
• Give the business units visibility into the rules of the road and a scorecard to measure how well they’re adhering to those rules

TPRM systems are made to:

• Manage an inventory of vendors that provide diverse products and services
• Facilitate the assessment of vendor risks and provide an appropriate risk rating
• Identify and manage vendors deemed critical
• Ensure that appropriate due diligence has been done before entering a contract with a vendor
• Monitor the vendor's performance to ensure products and services are of good quality and delivered per the terms of the contract
• Continuously monitor the vendor for new or emerging risk factors
• Manage the steps necessary to terminate a vendor relationship

In conclusion, large organizations will likely need a GRC tool and a robust third-party risk management tool. Use your GRC platform for what it’s intended to do: enterprise risk management, governance, audit and compliance. Use a solid third-party risk management platform with excellent support teams to manage your vendors and vendor risk. And, bringing it together, use APIs where appropriate to integrate data points and provide enhanced reporting.

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