How Third-Party Risk Management Software Can Change Your Vendor Risk Management World

Despite technological advances, many organizations still use a manual approach to vendor/third-party risk management (TPRM). Relying solely on tools like spreadsheets leads to errors, duplication, and inconsistency. There's often confusion about who has the latest vendor management spreadsheet, a lot of searching through emails and digging through files for request for proposals (RFPs), contracts, and other important documents.

There's no getting around it; manual TPRM is full of paperwork, siloed data, slow processes, and human error.

Improving Third-Party Risk Management Across the Organization

Monitoring your vendor risk environment continuously with TPRM software will reduce compliance risks, protect sensitive data, and manage vendors. The process of automating TPRM does not require you to have a lot of technical knowledge. Switching to a software solution can completely change your third-party risk world by boosting efficiencies, reducing errors, and drastically improving internal risk management processes.

Five Business Benefits of Third-Party Risk Management Software

TRPM software can benefit your organization in many ways, including:

1. Administrative Efficiency. When you use TPRM software, you can reduce data duplication and loss, which means you spend less time fixing administrative errors:
   
   
   • Centralized Document Storage. TPRM software allows your organization to create a central library of documents, such as the most current policies and procedures, inherent risk assessments, vendor due diligence questionnaires, and due diligence documentation. A centralized document library keeps everyone on the same page and up to date. A single document repository also makes preparing for audits and regulatory exams much easier. 
     
   • Streamlined Contract Management. With the help of TPRM software, your organization can gain control over your contracts and manage them more effectively. 
     
     You can use TPRM software to:
     
     • Set reminders for contract expiration or renewal dates
       
     • Notify vendor owners about key contract dates, such as upcoming contract reviews or renewals
       
     • Ensure that all vendor owners and stakeholders have access to the contract information.
       
2. Vendor/Third-Party Risk Management Efficiencies. There are vendor/third-party risk management benefits, such as:
   
   
   • Data Collection and Document Storage. TPRM software makes data collection more efficient. Vendor owners and vendors can fill out forms within the software system, eliminating the need for documents to be manually entered. Vendors can submit supporting documents through a secure vendor portal provided by the TPRM software. The vendor materials are saved within the application, which means no more sifting through emails to find important documents. 
   • Lifecycle Management. TPRM software streamlines vendor management across the entire vendor/third-party lifecycle, by standardizing workflows, reviews, and approvals. You don't have to worry about accidentally skipping important activities. The TPRM software makes it possible to enforce the right sequence and timing of lifecycle activities.
     
     After executing the contract, your organization can use TPRM software to schedule risk assessments, conduct due diligence, and track and monitor vendor performance. If necessary, you can monitor corrective actions or terminations of vendor relationships. And when it comes to offboarding, TPRM software can standardize your closeout process and vendor record storage.
     
   • Vendor Communications. Changes to policies, procedures, laws, and regulations can be communicated to vendors using TPRM software. You can optimize communications and target only the affected vendors.
     
     
     
3. Better Risk Management. Vendor/third-party risk management can help organizations avoid losing money due to bankruptcy, fraud, regulatory fines, or reputation issues. Providing oversight is often a difficult task. Effective TPRM management tools make compliance easier.
   
   The right TPRM software will enable you to:
   
   
   • Automate and streamline your vendor risk assessments
     
   • Set up custom requirements and requests to ensure that each vendor knows exactly what you require rather than asking the same question to everyone.
     
   • Personalize templates and format proprietary questionnaires
     
   • Engage your subject matter experts for risk assessments, and invite co-workers for collaboration on risk assessments
     
   • Monitor your vendors' risk with triggered risk reviews. 
     
   • Implement risk alerting and monitoring services to help you keep an eye on your vendor's cybersecurity posture, credit rating, reputation, and more.
     
   • Create follow-up processes, schedules, and reminders for checking up on previous risk flags and potential mitigation.
     
   
   
4. Better Reporting and Audit Response. TPRM software makes producing reports for senior management, the board, and examiners easy. Reports can be customized for specific needs such as regulatory compliance, vendor risk ranking, vendor performance, or business disruption planning. The ability to access all the information you need can also help your organization be more responsive to audit requests.
5. Cost Savings. TPRM software should be considered an investment. Initially, it will cost you money (and time), but it will ultimately save you money and time. The value created by TPRM software far outweighs the costs:
   
   
   • Prevent Data Breaches. On average, data breaches involving third parties cost $4.35 million. Effective third-party risk management powered by TPRM software can significantly reduce the risk of data breaches stemming from third-party vendors.
     
   • Enhance Existing Resources. By automating manual processes, your TPRM team can devote more time to tasks that will have a greater impact on your business.
     
   • Vendor Performance Management Savings. TPRM software is an important tool for identifying cost-saving opportunities for your organization. It's also possible to improve products and services by managing vendor performance, identifying performance gaps, and setting goals. In addition, developing partnerships with highly vetted and trusted vendors can also help you save money and decrease downtime.
     

TPRM software will enable you to monitor your third-party ecosystem more effectively and identify and mitigate risks to your organization and its customers.