What is the most dreaded thing for an enterprise when dealing with vendors? You guessed it right! It's the third-party risks that sound challenging. However, the companies have come up with numerous approaches to handle such risks - some are a novice, and the others are advanced.
Are you dealing with third-party risks for the first time? It's high time to get a glimpse of the commonly accepted approaches in your industry if that's the case! So, here we are illustrating the four best strategies to manage third-party risks efficiently. Let's get started!
1. Emails and Spreadsheets
The most primitive method to handle vendor risks operates through emails and spreadsheets. The companies send a questionnaire to the vendors over email and expect answers from the other side at the earliest. Furthermore, they store the responses in a spreadsheet or a database for future references. As you can see, it's the simplest way to manage third-party risks. Although mostly obsolete, it is still in practice among small and medium-scale enterprises.
2. Frameworks to Assess Vendor Risk
Whenever there is a dilemma, we have industry-recognized frameworks to solve our problem. Similarly, we have TPRM frameworks to assist us with vendor risk management in a corporate environment. These frameworks help us in evaluating vendors based on their answers to a massive questionnaire.
Based on the replies, you can identify the aspects and pitfalls that can bruise your business during crises. So, you can use these frameworks to highlight vulnerabilities and take action on time without affecting your company.
3. Third-Party Risk Management Tools
Although many enterprises use the legacy vendor risk-management approaches, they are insufficient in many regards. Your business might fall into trouble when current and adverse scenarios come into the picture. So, is there a way out? Or, more precisely, is there a new approach to tackle such problems? Luckily, yes!
We have yet another approach to handle vendor risks that many enterprises practice proficiently. It involves using some advanced tools to assess the vulnerabilities and threats when dealing with several vendors at a time. Numerous tools exist to offer your vendors a clear picture, providing enough opportunities to evaluate third parties based on several parameters. Also, these tools are more reliable than a bunch of questions that limit the scope of risks occurring in the future. Indeed, the TPRM tools are the future across industries and companies.
As more severe vendor risks surface, the need for next-gen TPRM platforms stands higher than ever. Since the previous approaches weren't competitive enough, the experts invented automated third-party risk management platforms to dodge vendor risks or mitigate their impacts dramatically entirely. These platforms offer a see-through into your workflow, depicting the threat-prone aspects that could lead to adverse dangers in the future. Since they are so impactful, these automated platforms have become a buzzword in the industries dealing with numerous vendors and suppliers.
So, these were the four approaches that enterprises leverage to wear off the impacts of vendor risks. Besides, next-gen alternatives are under the knife and yet to show up and simplify our problems shortly.