Understanding TPRM Compliance: A Comprehensive Guide

The Role of Risk Assessments and Continuous Monitoring in TPRM Compliance

Regulations like HIPAA often hold organizations accountable for non-compliance by their vendors, necessitating thorough risk assessments to measure the effectiveness of vendor security and data privacy controls and policies. In addition to regular risk assessments, continuous third-party monitoring is crucial to providing ongoing visibility into vendor threats and addressing real-time cybersecurity, financial, ethical, reputational, and operational risks.

Third-party risk assessments are conducted throughout the vendor risk lifecycle to holistically assess the organizational risk posed by specific vendors and suppliers. Often, results are mapped to key requirements outlined in industry or regulatory frameworks such as ISO, HIPAA, PCI DSS, UK Modern Slavery Act, GDPR, NIST CSF, and others. In addition to regular risk assessments, continuous third-party monitoring is essential to maintain continuous TPRM compliance and best practices.

A lot can happen in the time between vendor risk assessments. That is why it is important to gain ongoing visibility into vendor threats. Actively monitoring third parties for cybersecurity, financial, ethical, reputational, and operational risk is critical to ensuring the ongoing stability and resilience of your organization's supply chain.

Organizations and stakeholders can achieve continuous insight into the compliance posture of vendor organizations by integrating deep security data collection and analysis with a third-party risk management approach, aiding in the defense of internal systems, conducting site visits, and reviewing records. Third-party monitoring ensures sustainability, trust, and transparency in vendor relationships.

Streamline TPRM Compliance with Automation

Ensuring internal adherence to regulations, guidance, and industry standards is complex and challenging at best (especially when you rely on spreadsheets). Tack on compliance mandates related to third parties, vendors, business associates, and supply chain partners, and the burden of managing risk takes an entirely new trajectory.

Prevalent offers a single, unified third-party risk management (TPRM) platform that streamlines your compliance initiatives by automating risk assessments, monitoring, analysis, and reporting throughout the vendor lifecycle.

Cybersecurity Frameworks

Cybersecurity frameworks play a crucial role in implementing and maintaining TPRM compliance. They help organizations adhere to guidelines, best practices, and standards for identifying, assessing, and managing third-party cybersecurity risks in a common language. By incorporating these frameworks in their TPRM compliance programs, organizations can effectively manage third-party risks, ensure regulatory compliance, protect sensitive data, and maintain stakeholders' trust.

ESG Regulations

In recent years, ESG (environmental, social, and governance) considerations have gained increasing importance, with governments now enacting legislation encompassing various aspects of ESG. This includes establishing mandatory reporting requirements and active measures to ensure corporations integrate ESG principles into their core decision-making processes.

ESG compliance requirements address operational risks impacting third parties and extended supply chains. Public companies carry a legal responsibility to assess the ESG practices of their third-party partners and extended supply chains, seeking information to evaluate risks associated with non-compliance with core ESG regulations. A well-designed third-party risk management (TPRM) program not only helps organizations meet current ESG requirements affecting supplier and vendor relationships but also positions them to align with future ESG regulations and standards.

Industry Guidelines

There has been a noticeable increase, in recent years, in the prominence of regulatory compliance requirements focused on third-party risk assessments and monitoring, particularly for financial institutions, utilities, and critical infrastructure. These measures aim to ensure the security, integrity, and continuity of operations by addressing potential risks associated with outsourcing critical functions to external vendors, suppliers, and service providers.

Compliance with these regulations not only mitigates risks but also promotes accountability, transparency, and trust in vendor relationships. Organizations operating within these regulated sectors must prioritize robust vendor risk management practices to navigate the evolving regulatory landscape and ensure the protection of their operations and stakeholders.

Data Privacy Regulations

Data privacy regulations ensure that third-party vendors and service providers can safeguard personal information and prevent its misuse. TPRM is key in adhering to data privacy regulations such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) when organizations use third-party service providers to manage their customer’s data. Understanding the nuances of these regulations is paramount for organizations operating in a global and digitally interconnected landscape.

How to Build a TPRM Compliance Program

When delving into the intricate world of third-party risk management (TPRM) compliance, a systematic approach is paramount. Organizations should embark on a journey that not only meets regulatory requirements but also fortifies the resilience of their extended business ecosystem. Here are 10 crucial steps to initiate and strengthen TPRM compliance:

Step 1: Tailor your TPRM Program to Applicable Regulations and Frameworks

Examine the regulatory landscape to identify industry-specific and geographical requirements, and then pinpoint the suitable framework for customizing your compliance strategy to seamlessly align with these regulations.

Step 2: Evaluate Vendor Compliance Status During Sourcing and Selection

Include high-level compliance criteria in RFIs and RFPs and pre-screen third parties against vendor risk intelligence networks that provide access to completed assessments mapped to regulatory frameworks and industry standards.

Step 3: Ensure That Enforceable Third- and Fourth-Party Provisions Are Built into Vendor Contracts

Centralize the distribution, discussion, retention, and review of vendor contracts to ensure that all required provisions such as the right to audit are included and enforced through the vendor relationship. Seek solutions that seamlessly integrate contract lifecycle management with third-party risk management, so all internal teams are using the same workflow.

Step 4: Build a Centralized Database of Third Parties

Conduct a thorough accounting of all third-party relationships within your business ecosystem and build a central repository of vendor and supplier profiles. This will serve as a single point of reference for all internal departments to collaborate and report on your third-party compliance and risk management initiatives.

Step 5: Categorize Vendors Based on Inherent Risk

Inherent risk is a vendor’s risk level before accounting for any specific controls required by your organization. Use inherent risk scores to tier vendors and determine what type of ongoing due diligence they require. Compliance and regulatory factors can play heavily into this. For example, if GDPR is a significant driver for your organization, then tiering vendors based on their access to your customer’s data should be a primary consideration.

Step 6: Conduct Risk Assessments and Map Results to Applicable Regulations

Ensure ongoing compliance through periodic audits and assessments. Leverage automated vendor risk assessment solutions to streamline the process, manage evidence collection, and map responses to multiple regulations at once. This approach can vastly simplify and speed up your compliance reporting initiatives and should include built-in remediation recommendations to reduce the level of ongoing residual risk.

Step 7: Stay on Top of Compliance Violations with Continuous Monitoring

Leverage automated third-party risk monitoring solutions between periodic assessments. These solutions can surface new compliance issues by analyzing sources of cyber intelligence, business updates, financial insights, media screening, sanctions lists, breach events, and more.

Step 8: Measure Performance Against Contracts

Conduct regular performance assessments and contract reviews to ensure that third-party partners are adhering to any compliance mandates and applying any required remediations.

Step 9: Use Offboarding Processes to Avoid Future Compliance Problems

Terminated vendors may have access to sensitive data that may be subject to regulatory requirements, so follow a formalized offboarding process to ensure that all relevant data is appropriately destroyed or decommissioned.

Step 10: Stay Informed and Adapt to Changes

Stay informed about changes in the regulatory landscape and industry standards. Adapt your TPRM compliance strategy to incorporate new requirements and best practices, ensuring continuous relevance.

Conclusion

TPRM compliance is a dynamic and multifaceted endeavor that requires a holistic approach to assessing and continuously monitoring vendors and suppliers. By understanding the intricacies of risk assessments, continuous monitoring, cybersecurity frameworks, ESG regulations, industry guidelines, and data privacy regulations, your organization can fortify its third-party relationships, safeguard against potential threats, and thrive in an environment of trust and resilience. Embrace TPRM compliance not just as a regulatory obligation but also as a strategic imperative for the sustained success of your business in an interconnected world.

Next Steps: Discover Prevalent’s TPRM Compliance Solutions

Third-party vendors and suppliers are increasingly linked to data breaches, supply chain disruptions, and regulatory violations. As organizations face heightened societal and legislative scrutiny, ensuring resilience, responsibility, and ethical practices across their entire operations is imperative. Now, more than ever, organizations must ensure that their vendors can safeguard sensitive data, comply with crucial regulations, and uphold ethical business standards. Manually collecting, managing, and reviewing risk status, on the other hand, is unreliable, error-prone, and expensive. Through our single, integrated Third-Party Risk Management (TPRM) platform, Prevalent makes enforcement and risk prevention easier and faster. Request a demo to see if Prevalent is a fit for you.