Risk management is more complex than ever, and procurement processes look considerably different than they used to. Unprecedented global events have disrupted the world's economy and risk management strategies have had to change. Each step in the procurement process has been impacted, and risk profiles of third-party suppliers have likely changed as well. Every new business relationship now requires third-party risk management (TPRM).
The terms to be negotiated with suppliers now need to reflect the potential circumstances that could arise from a global health crisis like the pandemic and geopolitical issues that effect energy markets like the ongoing conflict in Ukraine. Amendments to force majeure clauses now need to take into consideration unknown circumstances that have no precedent. For example, you may need to upgrade digital infrastructure to better cope with remote working conditions for the foreseeable future.
Research, Research, Research
Outside of administrative maintenance, it is the research element of third-party risk management that consumes the most resources. The new global situation has triggered the re-evaluation of risk assessments concerning the most well-established long-term business relationships. Investigative tools are essential to identify, authenticate, investigate, and monitor businesses and individuals. You're going to need access to databases such as LexisNexis and Dun & Bradstreet to perform comprehensive background checks that combine public record sources and private data sources into a single report.
Assess Your Own Risk Profile
Adapt your third-party risk management strategy to assess your own business risk profile. For larger organizations, this is particularly complex because business risk associated with your own operation is impacted by those companies with whom you already hold contracts. For all parties, this symbiotic relationship can mean the difference between sinking or swimming in a flood of unexpected global circumstances.
Renew Your Own Risk Profile
Update governance policies that meet the new challenges we face the age of Coronavirus, climate change, and supply chain disruptions. This means renewing your own risk profile by re-examining current risk assessments for active contracts, re-shaping overall third-party risk management policy documentation, and communicating all changes to the rest of the organization. Automate processes for effective incident management, bolstering your ability to prevent fraud and detect fraudulent activity.
Navigating Risk in the New Normal
Third-party risk management software facilitates the mitigation of risk through connective research tools and configurable reporting features. The risk landscape has changed, so your approach to third-party risk management must change as well. Digitalization is the clear solution because it provides risk mitigation tools with a high degree of automation. The centralized and configurable nature of TPRM software makes data analysis and record keeping considerably easier. While only authorized users have access to the platform, every action of those users is logged, tracked, and remains fully auditable. Updated standards and regulations of your business are enforceable throughout the system enabling managers to increase the speed of decision making