Supplier Risk Monitoring for Effective Third Party Oversight
Written by John Bree
Suppliers are seamlessly embedded and integrated into enterprise supply chains. Fortune 2000 enterprises alone work with thousands of third parties, large and small, cutting across multiple businesses and functions. Each of those third party relationships contributes to overall risk. In an earlier blog, we spoke about how global sourcing magnifies risk.
Essential to building a comprehensive Third Party Oversight program is a clear understanding of the importance of third party risk. Auditors are challenging businesses on how they identify and manage the risks of third parties that have significant impact on reputation, compliance, and business operations.
A structured approach to defining risks across your global supplier portfolio is the essential first step to ensuring a successful Third Party Risk Management (TPRM) program.
The primary task of risk experts while instituting Third Party Oversight must be to establish an objective framework to assess, quantify, and monitor risk. Imperative to success is to evolve a common understanding across your organization based on the precise nature of supplier risk and its potential impact. While over time supplier assessment processes might have become more rigorous, some suppliers may have slipped through the vendor assessment cracks, throwing the door open for potential disruption and losses.
Supplier risk, in the global sourcing context, takes many forms.
Devising a methodology to define and quantify risk is a rigorous and often time consuming affair. However, it must not be a one-time exercise. Risk identification and management is a critical component of the entire third party relationship life cycle. Continuous monitoring is the foundation of successful supplier risk management.
Risks never end; risk monitoring can’t either.
In an era of ballooning digital convergence and increasing regulation, enterprises must do more to protect themselves from third party risk.
This is where Governance, Risk & Compliance tools such as Supply Wisdom can play an important role in your Third Party Risk Management program. Supply Wisdom equips you with an objective methodology to evaluate supplier risk. Supply Wisdom quantifies third party risk across nine parameters:
- Financial Risk
- Service Maturity
- Partner Ecosystem/Alliances
- Thought Leadership
- Legal/Compliance & Reputational Risk
Auditors can, at a glance, know which suppliers pose significant risk, drill down into the nature of the risk, and institute mechanisms to mitigate potential impact on business operations. Supply Wisdom equips Sourcing Auditors and Control practitioners with proactive and continuous supplier risk monitoring, allowing them to focus on mission critical suppliers and managing response to potentially disruptive risk events. Low risk and/or less business critical suppliers can be put on periodic risk reporting schedules, saving review time for important and high risk suppliers.
Tap into real-time intelligence on your business critical suppliers to add certainty to your operations with Supply Wisdom!