How to manage third-party risks? We share some practices that deserve to be considered and implemented in your organization.

Third-party risk management constitutes a pillar in the resilience capacity that a company can develop, since, as we have seen, during the COVID-19 pandemic, external factors can cause catastrophic problems for any company, and to resist them, it is necessary to use risk management software to prevent and avoid all kinds of threats related to your suppliers. 

Stockouts and interruptions in production lines are just some of the most common consequences of poor or non-existent risk management by third parties . Since companies are increasingly connected to each other, the effects of a supplier can become your weakness if you do not implement the necessary methodology to cushion the impacts. 

Third-party risk management represents a major challenge for many companies that do not know how to prevent conflicts from their suppliers from affecting their operations. To achieve this, there are some practices that deserve to be considered and implemented in your organization.


Best Practices for Managing a Third Party Risk Control Program

Generating ideas that can be used to mitigate third-party risks is easy to some extent. However, putting them into practice correctly is an even more complex issue. 

To ensure that risk management programs are achievable and measurable, there are some practices that are usually effective, such as adopting protocols, instructing employees who are directly affected by risks, following up on processes that are under review, and even taking legal action to prevent risky behavior by suppliers. 

All these practices can be developed in the following way:

From the government model

It is necessary to establish policies that allow you to anticipate the risks of external entities, implement standards, and generate procedures that help your suppliers to comply with your specifications in a simple and measurable way. 

Adopting policies is a good way to establish your position regarding the critical points of the commercial relationship with your third parties. Formalizing your requests creates a greater commitment between all parties. 

Training plan

In order for third-party risk control to be part of the organizational culture, you will have to make all members of your team aware of the importance of proper management, and you must also instruct them to identify weak points in the supply chain, as well as report on their obligations during the different protocols to be implemented. 

Training all employees will help ensure that the third-party risk management program is successfully assimilated, and in the event of interruptions, they will be better able to deal with them. 

Legal actions

There is the option of contractually demanding risk prevention from third parties and even requesting the right to audit some of their practices or requesting that your company be notified of any incident regarding the quality of materials or services or effects on safety and privacy, depending on the case. 

Legal actions, although not to the liking of all organizations, are the most effective way to ensure that a business partner or any external agent complies with the requirements you request to avoid risks. 

A database with new providers

There is always the possibility of ending the commercial relationship, like vendor due diligence with suppliers, so having a database of new potential suppliers is a key action to guarantee your operations. In the event of termination, you will have much more solid options than starting from scratch.