5 Ways to Get More Value from Third-Party Risk Scores

Effective third-party risk management (TPRM) requires not only measuring a vendor’s internal practices and controls, but also understanding how external factors can impact their risk profile. Integrating inside-out assessment with outside-in monitoring enables more holistic and coordinated risk management, and both practices frequently appear as regulatory requirements.

Unfortunately, most monitoring tools solely focus on cybersecurity exposures, only telling part of the story. Below are five additional vendor risk categories to monitor, plus five ways you can use this expanded intelligence to make better risk-based decisions.

5 Vendor Risk Categories to Monitor Beyond Cybersecurity

Expanding the scope of outside-in monitoring begins with acknowledging that vendor intelligence can benefit teams outside of IT security. For example, a fire at a manufacturing plant, a visit from OSHA, bad financial results, or an SEC investigation are red flags that can influence procurement decisions. These types of intelligence is typically not available in cyber monitoring tools. Given that, here are five categories of vendor risk to consider in addition to cybersecurity exposures:

1. Operational Risks

Operational risks can arise from leadership changes or mergers and acquisitions that alter a business’ strategic focus. Partnerships and OEM relationships may provide early warnings of price changes or a shift in marketing strategy, and natural disasters or health crises can significantly affect operations.

2. Brand Risks

These occur when a vendor is required to recall products, suffers a data breach, or experiences another incident resulting in negative PR or adverse media coverage. These events can also result in financial penalties and remediation efforts that can affect the vendor’s ability to deliver their products and services.

3. Regulatory, Sanctions and Legal Risks

Class action lawsuits, international sanctions (e.g., OFAC, EU, UN, BOE, FBI, BIS, etc.), and court filings from the FDA, FSA, SEC and other regulators can substantially delay the delivery of third-party products and services. They may also signal the need for actions to protect your business from white-collar crime, money laundering, and reputational damage.

4. Financial Risks

Financial events such as bankruptcy proceedings, customer losses, missed earnings, and any of the previously discussed areas can lead to vendor restructuring and service disruptions.

5. Politically Exposed Persons (PEPs)

Corruption and bribery risks are often overlooked in third-party evaluations. It can be damaging for your company to be connected with PEPs, their families and associations, so it’s important to gain visibility into this vulnerability.

These risks make it essential to monitor for business and financial events that can impact the supply chain. However, it can be complex and time-consuming to get useful data—especially when you’re relying on RSS feeds, stale credit reports, and disparate news websites. Prevalent Vendor Threat Monitor (VTM) can help.

Prevalent VTM continuously tracks and analyzes external threats to your third parties. The solution not only monitors the Internet and dark web for cyber threats and vulnerabilities, but also combs over 530,000 sources of business and financial intelligence on your vendors. These insights enable you to supplement and validate internal assessment responses for a 360-degree view of third-party security and compliance.