Outsourcing third-party risk management to a managed services provider is another approach gaining traction. Our survey revealed that 41% of financial services organizations expect to adopt a managed services approach to TPRM over the next 2-3 years. They cite three reasons driving this shift:
- Specialist expertise available on demand.
Top talent with a deep understanding of TPRM is hard to find and expensive to keep. When companies outsource TPRM to a managed services provider, they have scalable, flexible access to global teams of specialist expertise, which can be more cost-effective.
- The latest technology and data-driven methods.
Third-party risk management is increasingly data-driven, proactive and action-oriented, drawing on the strength of machine learning and artificial intelligence to respond quickly to threats, including those posed by fourth and “nth” third parties. But continual investment in these technologies – and the workforce to run them – is difficult for an organization to sustain. Collaboration with the right managed-services provider can give organizations access to the latest and most effective cloud-based technology, advanced data-driven analytics and the confidence that data is always used in accordance with compliance obligations.
- Tried-and-tested processes proven to reduce risk.
Many companies are still relatively new to the world of third-party providers: 52% of survey respondents indicated they had run TPRM programs for three years or less. In contrast, TPRM managed-services providers draw on many years of experience running complex programs enabled by proven processes and methodologies.
Depending on an organization’s needs, a managed services provider can either oversee the entire TPRM function or take on specific elements, such as performing the inherent risk profiling, executing TPRM assessments, conducting findings management and even the deployment and maintenance of a TPRM technology platform.