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FIVE PILLARS FOR TPRM SUCCESS

in partnership with GAN Integrity

FIVE PILLARS FOR TPRM SUCCESS

Comprehensive Third-Party Inventory

Maintaining a complete, centralized inventory of all third-party relationships is crucial for visibility and control. This repository details each vendor’s services, contact points, contract terms, and associated systems. By mapping every supplier or service provider, organizations ensure they don’t overlook hidden or rogue engagements.

Why It Matters

If you don’t know who your third parties are, you can’t effectively identify and manage their risks. Without an accurate inventory, risk assessments become inconsistent, and potential vulnerabilities may go unaddressed.

Industry Note

Many organizations find it challenging to keep their vendor lists updated, especially as various business units independently engage suppliers. This challenge is compounded by the rise in SaaS and freemium applications that employees may adopt without formal oversight.

How AI May Help

Automated Discovery: AI-driven network scans can identify unregistered connections or data flows with third parties.
Data Consolidation: Machine learning can reconcile disparate vendor records from multiple systems, such as accounts payable, ERP systems, and GRC systems into a single, unified profile.

AI Governance Caution

Data Accuracy: Automated discovery can yield false positives; periodic human review is critical to confirm legitimate vendor relationships.
Privacy Compliance: Any system that collects vendor data must adhere to data protection requirements (e.g., GDPR).

FIVE PILLARS FOR TPRM SUCCESS

Risk Identification & Assessment

The second pillar of TPRM is accurately identifying and assessing third-party risks before onboarding and throughout the engagement. Standardized questionnaires capture key details - such as cybersecurity measures, financial stability, and compliance posture - to guide risk scoring and segmentation. Vendors are classified as low, medium, or high risk, with scrutiny scaled accordingly. High-risk vendors, particularly in corruption-prone regions or industries, may require enhanced due diligence, site visits, or ongoing audits.

Why It Matters

A risk-based approach ensures resources are allocated effectively, focusing on the vendors and scenarios with the highest stakes.

Industry Note

Organizations increasingly use continuous, event-driven assessments- prompted by media reports or vendor changes - to keep risk profiles current. It’s also vital to consider concentration risk, avoiding over-reliance on a single vendor or region.

How AI May Help

Contextual Risk Assessments: AI creates bespoke risk assessment questionnaires and pre-populates with known data.
Contextual Risk Scoring: Algorithms evaluate factors like vendor industry, country stability, assessment responses and known incidents to risk-score third parties

AI Governance Caution

Explainability: Regulators and stakeholders often demand clarity on how AI models generate risk assessments.
Vendor Risk Assessment: Identify third parties that may expose you to AI-related risks. Integrate questions to assess their AI risk posture effectively.

FIVE PILLARS FOR TPRM SUCCESS

Due Diligence & Onboarding

Due diligence and onboarding are critical pillars of a successful Third-Party Risk Management (TPRM) program, ensuring vendors meet compliance, ethical, and operational standards before formal engagement. According to Deloitte, effective due diligence is risk-based and tailored, scaling efforts according to the vendor’s risk profile to maximize efficiency and minimize blind spots. Screening typically includes checks against sanctions lists, politically exposed persons (PEPs), adverse media, certifications, financial stability, and regulatory compliance.

Leading practices increasingly extend due diligence beyond direct suppliers to include subcontractors, addressing emerging ESG concerns such as modern slavery and environmental impacts.

Contracts are structured to define performance expectations, data protection requirements, and service-level standards, providing a clear framework for accountability and ongoing assessment.

Effective onboarding involves setting clear expectations and communication protocols from the outset, fostering transparency and collaboration.

2025 World's Most Ethical Companies honorees perform third-party due dilligence:

How AI Can Help

AI Screening: Automates scans of public records, databases, and financial statements to quickly detect risks and inconsistencies.
AI Due Diligence: Leverages deep search capabilities to compile thorough, narrative-driven reports from vast data sources, enhancing accuracy and speed.
NLP-based contract analytics parse and compare proposed terms to risk policies, automatically flagging missing clauses and inconsistent performance benchmarks.

FIVE PILLARS FOR TPRM SUCCESS

Continuous Monitoring & Oversight

Managing third-party risk is an ongoing effort. Continuous monitoring ensures that any changes in vendor risk profiles, service-level agreements, regulatory requirements, or cybersecurity alerts are identified promptly—allowing rapid, targeted corrective actions.

Why It Matters

Early detection of performance or compliance lapses prevents minor issues from escalating into major incidents, protecting both operational continuity and organizational reputation.

The 2025 World's Most Ethical Companies honorees routinely monitor:

Industry Note

Although many organizations traditionally rely on monthly or quarterly reporting cycles, technology advancements in data analytics and automation are making near real-time monitoring increasingly practical, enabling a more agile and proactive approach to third-party risk management.

How AI Can Help

Real-Time Alerts: AI anomaly detection can quickly spot suspicious activity or sudden performance drops.
Predictive Trend Analysis: Machine learning uses historical and external signals to forecast potential vendor issues.

AI Governance Caution

Alert Fatigue: Excessive automated alerts can desensitize teams, risking missed genuine threats.
Data Reliability: AI results rely on accurate, timely data; errors can significantly skew outcomes.

FIVE PILLARS FOR TPRM SUCCESS

Issue Remediation & Continuous Improvement

Even robust TPRM programs can face incidents—ranging from data breaches to compliance lapses or reputational crises. A well-defined remediation process ensures swift containment, thorough root-cause analysis, and transparent stakeholder communication.

Why It Matters

Effective remediation protects customer trust, averts regulatory penalties, and reduces the risk of repeat incidents. Ongoing refinements help these programs mature and stay ahead of evolving threats.

Industry Note

Lessons learned during remediation should feed back into risk assessment criteria, onboarding protocols, and performance metrics, continually strengthening the overall TPRM strategy.

Maturing a third-party risk management (TPRM) program delivers tangible advantages across multiple dimensions:

Stronger Regulatory Compliance
Enhanced Operational Resilience
Improved Vendor Performance and Accountability
Cost Efficiency and Resource Optimization
Reduced Reputational Risk
Data-Driven Decision-Making
Competitive Advantage

How AI May Help

AI-driven root-cause analysis tools can rapidly sift through incident data—logs, user reports, system metrics—to pinpoint contributing factors and propose targeted remediation steps.

FIVE PILLARS FOR TPRM SUCCESS

Don’t neglect…offboarding

Offboarding third parties is a critical yet often overlooked aspect of a robust Third-Party Risk Management program. Proper offboarding ensures that once a vendor relationship ends, all associated risks are effectively mitigated, compliance obligations are fulfilled, and sensitive data is protected.

Neglecting offboarding can leave organizations exposed to data breaches, compliance violations, contractual disputes, and reputational damage.

Key Considerations for Offboarding

Data Security & Access Termination
Revoke vendor access, retrieve or destroy sensitive data, and ensure compliance with data privacy laws (e.g., GDPR, CCPA).
Contractual Compliance
Confirm all obligations are met, document termination compliance, and complete final checks to fulfill deliverables.
Knowledge Transfer & Continuity
Complete knowledge transfer, document lessons learned, and apply insights to future processes.
Record Keeping & Auditing
Maintain detailed records for compliance, archival, and future audits
Payment System Updated
Ensure vendors are promptly removed from payment systems to prevent unauthorized or erroneous payments after contract termination.

CONCLUSION:

Making TPRM Work Smarter

Managing third-party risk is more challenging than ever. With expanding supply chains, evolving regulations, and rising ESG expectations, the pressure is on for companies to keep pace. But the solution isn’t just about working harder, or adding more headcount -it’s about working smarter.

AI is proving to be a powerful tool in streamlining TPRM. It’s cutting through mountains of data, reducing false positives, and speeding up onboarding and monitoring processes. Instead of drowning in noise, compliance teams can focus on what really matters- identifying genuine risks and taking action.

But AI alone isn’t enough. It works best when it’s part of a bigger strategy that connects compliance, procurement, IT, legal, and cybersecurity teams. It’s about building a unified approach where everyone is aligned and working toward the same goals.

The key is using AI where it makes the most impact. That means automating repetitive tasks, surfacing hidden risks, and continuously monitoring vendors for changes that matter. And just as importantly, making sure governance is in place to keep everything fair, accurate, and transparent.

Ultimately, TPRM success comes down to blending AI’s efficiency with human expertise. When done right, it transforms TPRM from a reactive process into a proactive advantage- giving companies the visibility, speed, and resilience they need to stay ahead of risks.