Third-party risk management (TPRM) is crucial to any risk management plan. It entails recognizing, analyzing, and mitigating risks connected with third-party connections, including those with suppliers, vendors, contractors, or partners. TPRM is more crucial than ever as organizations depend on third-party suppliers for essential operations and services.
Many developments are expected to shape the TPRM environment in 2023. The rising utilization of artificial intelligence (AI) and machine learning (ML) to control third-party risk, the growing relevance of data security and confidentiality, and the introduction of new regulatory standards and requirements are among these trends.
This blog will give helpful insights into the current trends and advances in TPRM, whether you are a compliance officer, an IT professional, or a business executive managing third-party partnerships. Now, let's look at the changing landscape of third-party risk management in 2023!
Third-Party Risk Management Trends for 2023
Following are some of the potential third-party risk management trends for 2023:
Greater Use of Artificial Intelligence and Automation
TPRM teams are expected to utilize more automation and AI to speed up risk assessment procedures and improve risk monitoring capabilities. This will allow them to detect and respond to possible threats faster and more effectively.
Increased Emphasis on Supply Chain Resilience
The COVID-19 pandemic underlined the need for supply chain resilience and businesses' need to manage risks connected with third-party suppliers. We may anticipate that TPRM projects will likely focus more on developing resilient supply chains and anticipating possible disruptions in 2023 using third-party risk management software.
Heightened Regulatory Scrutiny
Regulatory authorities are expected to continue scrutinizing third-party interactions. TPRM teams must keep up with any regulatory developments affecting their programs and use any third-party risk management program.
More Emphasis on Vendor Risk Culture
TPRM teams must pay greater attention to analyzing vendor risk culture and ensuring their third-party suppliers align with the company's values and risk appetite.
Increased Focus on Cyber Risks
Given the increased frequency of cyber-attacks, TPRM teams must focus more on identifying and mitigating cyber risks related to third-party connections. This will entail more extensive reviews of third-party security procedures and increased monitoring for possible cyber threats.
These are only a few likely third-party risk management trends for 2023. However, remember that new risks and difficulties can arise anytime, and TPRM programs must stay nimble and adaptive to address the risks adequately.
Role of Third-Party Risk Management Software
Third-party risk management software is crucial in assisting firms in managing the risks connected with their third-party partnerships, especially considering new business trends. These are a few ways that third-party risk management software may help firms in dealing with growing trends:
Increasing Reliance on Third-Party Suppliers
As third-party vendors and outsourcing use grow, companies rely more on other entities to deliver essential business activities. Third-party risk management software may assist firms in managing this risk by offering an entire perspective of each vendor's risks, including cybersecurity, operational, and compliance risks.
Cybersecurity risks are an increasing problem for businesses, and third-party service providers can pose a considerable danger. Third-party risk management software can assist companies in identifying and assessing the cybersecurity risks associated with third-party suppliers, such as their security policies and capacity to respond to security events.
As rules and standards become more complicated, firms must comply with an increasing number of them. Third-party risk management software may assist companies in ensuring that their third-party providers adhere to applicable legislation and standards like GDPR, HIPAA, and ISO 27001.
Supply Chain Disruptions
Supply chain disruptions may seriously affect businesses, and third-party risk management software can assist companies in identifying and mitigating the risks connected with their suppliers. This involves identifying single points of failure in the supply chain and evaluating suppliers' financial soundness.
In short, as companies face new and evolving risks related to their third-party connections, third-party risk management software is becoming increasingly critical. Third-party risk management software may assist firms in limiting the impact of these risks and maintaining business continuity by giving a complete perspective of these risks and enabling efficient management.
Moreover, if your firm is searching for effective TPRM software to help mitigate third-party risk and allow your company to track, manage, and report vendor risks under one platform, then Predict360's Third-Party Risk Management Software will be the best solution. Request a demo to learn more about its features.