Glossary definition: Third-party risk management

Third-Party Risk: Strategies for Mitigation

Third-party risk management is the process of identifying, assessing, and mitigating risks associated with relationships with external entities, such as vendors, suppliers, contractors, and other third-party service providers. It is a critical component of an organization's overall risk management strategy and involves assessing the potential risks associated with a given third-party relationship, developing and implementing processes and procedures to mitigate those risks, and monitoring and evaluating the effectiveness of those processes. The goal of third-party risk management is to ensure that any risks associated with a third-party relationship are managed in a way that is consistent with the organization's risk management policies and procedures. This includes evaluating the third-party's financial stability, security practices, and compliance with applicable laws and regulations. Additionally, organizations should monitor the performance of the third-party to ensure that the services provided are meeting the organization's expectations.