6 Third-Party Risk Management Best Practices for 2023

Podcast Transcript

Hi - this is Kelly with Venminder. 

In this podcast, you’ll learn six third-party risk management best practices for 2023. 

Here at Venminder, our team of certified industry experts specializes in identifying trends and best practices for improving your third-party risk management program in the new year. 

For many organizations, 2022 was a very challenging year. The threat of malicious actors, ongoing supply chain disruptors, and regulatory updates has made business as usual a moving target. As a result, third-party risk management teams have been tasked with improving security measures and complying with new regulations and industry requirements. Going into 2023, it’s a great time to review your third-party risk management basics and ensure that your program has a solid foundation.

Here are the six third-party risk management best practices that you should bring into 2023: 

• First, be sure to follow the third-party risk management lifecycle. By following the lifecycle stages and completing the required activities and steps in the right order, you can be sure that your organization is properly identifying, assessing, and managing risks throughout your vendor relationships. Whether it’s onboarding new vendors, performing your ongoing risk and performance activities, or offboarding a vendor at the end of the contract, the third-party risk management lifecycle provides a roadmap to success.

• Second, keep your policies updated. Market conditions, regulatory updates, and internal changes directly impact your third-party risk management program, so it’s essential to ensure that your policies are updated accordingly. We recommend updating your third-party risk management policies at least annually and having the updated policy reviewed and approved by your board of directors or senior management. 

• Third, maintain a current issues log that tracks any issues you’ve encountered. In your documentation of the issues, it’s important to include details such as a description of the issue, a remediation plan and date, and any accountable stakeholders. Be sure to flag and report any issues that are at risk or past due.

• Fourth, review and update your due diligence questionnaires and vendor documentation standards. The vendor risk landscape is constantly evolving, and insufficient or outdated questionnaires can degrade your third-party risk management processes. As an annual practice, work in partnership with subject matter experts to review and update your risk questionnaires, ensuring that new and emerging risks are identified and incorporated into your risk assessment process. Don’t forget to verify that your due diligence document and evidence standards are consistent with your updated questionnaires. 

• Fifth, collaborate and communicate with your stakeholders. As they say, third-party risk management is a team sport. To build and maintain strong relationships, it’s important to ensure that stakeholders understand the purpose of third-party risk management and why following the required processes are so important. Verify that your stakeholders understand how the tasks must be completed and the organizational expectations for quality outputs. Don’t forget to make communication a two-way process by establishing a regular meeting routine and establishing a channel for stakeholder feedback.

• And, finally, develop third-party risk management program metrics to measure your program’s overall health and effectiveness. Your program metrics should proactively identify risks, discover resource gaps and needs, and support your program’s objectives. 

As we move into 2023, it's important to remember that third-party risk management is a dynamic and evolving process that demands constant attention and adjustment. Still, mastering program basics like following the third-party risk management lifecycle and establishing regular routines to review and update your policy, risk assessments, and documentation standards can only benefit your program and organization in the long run. Don’t forget that managing open issues and stakeholder collaboration are both essential to an effective third-party risk management process. If you haven’t already, take time in 2023 to establish third-party risk management program metrics that help you identify emerging risks, measure the health and effectiveness of your program, and highlight your hard work and achievements.