As organizations increasingly rely on external vendors and suppliers to access the best of today’s technology, third-party risk management (TPRM) has become critical. With data breaches, regulatory violations, and financial losses remaining top of mind for companies, TPRM ensures that these partners meet standards, protect sensitive information, and align with regulatory requirements. But what are the key components of an effective TPRM program? Atlas offers a deeper look at the building blocks of this essential practice.
Vendor Governance
Vendor governance establishes a framework for managing vendor relationships over their lifecycle, from initial selection to ongoing evaluation and, eventually, offboarding. This process ensures that vendors meet quality, security, and compliance standards, especially as organizational needs evolve. Vendor governance involves creating clear policies that outline the responsibilities, performance expectations, and compliance requirements for vendors.
Effective governance also entails periodic reviews, performance assessments, and corrective actions for vendors who fall short of standards. By implementing vendor governance, companies can maintain control over third-party engagements and address potential issues proactively, helping to minimize risks that might otherwise go unnoticed.
Contract Management
Contracts are the backbone of vendor relationships, defining the terms, obligations, and expectations between organizations and their third-party partners. Contract management within TPRM is crucial, as it establishes clear guidelines on data security, compliance, and service levels. Companies should prioritize including clauses around data privacy, liability limitations, and breach notification requirements.
Monitoring contract compliance is essential to ensure that vendors uphold their end of the agreement, as well as to manage the contract's renewal, renegotiation, or termination stages. Regular contract reviews allow organizations to update terms to reflect evolving regulatory standards and industry best practices, helping protect against new vulnerabilities and regulatory risks.
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