Best Third-Party Risk Management Software

Third-Party Risk Management Software Guide

Third-party risk management software is an important tool to help businesses identify, manage and mitigate risks associated with their third-party vendors and service providers. This type of software helps organizations take proactive measures to ensure that their third parties are compliant with key regulations and standards, have robust security controls in place, and are able to deliver services or goods in a timely manner.

Third-party risk management software typically consists of both automated processes and manual processes. Automated processes allow for more consistent monitoring of compliance, security and performance metrics. These processes can be used to quickly detect any changes that may occur within the vendor’s infrastructure and alert the appropriate personnel so they can address the issue immediately. Manual processes can include audits, questionnaires, interviews or surveys that provide detailed information about the vendor’s operations including methods used for data protection.

The primary purpose of third-party risk management software is to reduce the likelihood of unauthorized access or breaches in a company’s sensitive information due to inadequate security measures adopted by its vendors. The software allows organizations to continuously monitor their vendors and receive alerts whenever there is a change in activity or status at any point during a vendor's lifecycle. Additionally, it enables companies to manage compliance requirements as well as any contractual obligations with respect to pricing models or service level agreements (SLAs).

Moreover, effective third-party risk management reduces costs associated with vendor onboarding process by automating tasks such as background checks, collecting signed contracts from suppliers, verifying licenses etc., which reduces the amount of time spent on manual review processes from weeks down to days. It also allows better realignment between internal departments such as risk management teams and procurement teams who need access various parts of each vendor's profile simultaneously without duplicating efforts.

Overall, using third-party risk management software increases an organization’s efficiency while protecting them from legal/regulatory liabilities resulting from lapses in supplier oversight. It provides peace of mind by allowing companies to stay on top of their vendors' performance without having to dedicate too many resources towards managing them manually.

Why Is Third-Party Risk Management Software Important?

Third-party risk management software is a type of risk management software that safeguards businesses from non-compliance, data breaches, and similar risks relating to third-party vendors, suppliers, and other parties. The software also collects and manages risk information, then it organizes it for thorough data analysis. These tools analyze, track and reduce all types of risks that negatively impact businesses and their supplier relationships. Third-party risk management platforms are used by compliance officers and managers in a vast array of industries, including supply chains, quality assurance and manufacturing.

Compliance specialists leverage third-party risk management software to facilitate compliance with internal business policies and external laws and regulations, such as FFIEC, CFPB and HIPAA. Management and leaders benefit from these applications because of the lower risk of business disruptions caused by unreliable suppliers. The software is typically part of a bigger risk, compliance and governance setup, but it can also be used on its own.

When used separately, third-party risk management tools need to be integrated with other tools for supply chain management, compliance, ERP, quality assurance, risk and governance. The software offers workflow and templates for assessing risks related to suppliers. Business managers can get a full-circle overview of vendors. This information can be shared within and outside of the organization. The third-party risk management tools ensure compliance with a range of organizations.

An optimal third-party risk management tool offers processes for overseeing and controlling supplier risks. They are set up for self-service, and the portals make it easy for vendors to send information and documentation. The applications include standard and customized monitoring and risk exposure reports. These tools also make it possible to monitor changes in vendor performance and risk levels.

Third-Party Risk Management Software Features

When considering a third-party risk management tool, consider these features:

• Route Tasks - Implement conditional routing policies based on the user’s answer to the questions you ask on the form.
• Visualize the Details - The best third-party risk management tools make it easy to visualize risk processes and compliance. For example, a quick drag-n-drop interface facilitates mapping of procedures at your company to the platform. This allows you to add logic and rules for automating the different processes that keep your business going. The form designer allows you to create forms and add fields at each step of your business processes.
• Share Email Triggers and Automatic Notifications - Configure notification policies that are based on dates or the completion of specific tasks in the workflow. Set up the notifications to be sent to the staff members who need the information.
• Customize Groups and Roles - Design roles based on job functions and duties at your organization. Create groups of similar roles or for specific processes.
• Build a Library of Configurable Processes - Quickly set up complex processes with multiple steps. The software makes it easy to log incidents, track status, approve workflow or audit transactions.
• Calculate Information - Build expressions that reference custom fields. These expressions can contain all known mathematical operators to calculate important measures for decision-making processes.
• Create Automatic Deadline Rules - Set up automatic SLAs for sub-workflows and processes. They’ll reduce missed deadlines.
• Take Advantage Pre-designed Process Applications - Use the repository of pre-configured process applications for compliance, governance and risk. Customize each of the procedures to your company’s specific needs.
• Scale Up and Adapt - Third-party risk management tools enable your business to grow without experiencing more risk exposure. They facilitate agile business processes and continuous improvement.
• Design Reports On the Fly - Make a custom dashboard for just one vendor or a special meeting. The easy-to-use designer tool makes visual reports easy to make and share.
• Include Outside Users - Delegate work to contractors or vendors, and send them the steps through email with an exclusive link to the tool.
• Integrate APIs - The RESTful API simplifies integration with other tools. You’ll be able to power your workflow faster and without missing any key events or details.
• Collaborate - Watch, discuss, assign and share tasks from one location. Easily manage comments, queries and concerns.

Benefits of Third-Party Risk Management Software

1. Comprehensive Risk Management: Third-party risk management software provides organizations with comprehensive risk management capabilities, allowing them to identify and monitor risks from all external sources that could impact their operations. This includes taking into account factors such as industry regulations, changing technologies, customer satisfaction levels and more.
2. Enhanced Visibility: Automated third-party risk management solutions provide enhanced visibility into supplier activities, enabling organizations to quickly detect any risks associated with vendors or service providers. Detailed reports can be generated to evaluate performance levels and identify areas of concern.
3. Improved Compliance: By having access to detailed external risk data, organizations are better able to maintain key compliance standards set by governing bodies such as the PCI DSS or GDPR. This allows organizations to quickly address potential issues by effectively applying corrective measures provided by the software platform.
4. Automation: By automating manual processes associated with third-party risk evaluations and analysis, third-party risk management systems help streamline operations while mitigating errors caused by human input. The software can also be used to automatically track changes in vendor contracts over time for added accuracy in reporting.
5. Reduced Costs: Implementing automated third-party risk management tools helps reduce time and money spent on assessing, evaluating and monitoring external suppliers which can result in cost savings for businesses large and small.
6. Improved Efficiency: Automation and reporting capabilities provided by third-party risk management systems help organizations improve the efficiency of their operations while reducing costs. This allows them to stay competitive in today's ever-changing business environment.

Types of Third-Party Risk Management Software

Every day, a new data breach is detected. High-profile breaches trace back to supply chains, and the regulators are waking up to these clear vendor risks. That’s why so many organizations are investing in management programs for third-party risks.

The right third-party risk management platform can be challenging to implement and learn. Figuring out which one is the right choice for your company is a challenge. There isn’t one perfect tool for all businesses. However, there are some tools that all organizations need to have.

Integrated Risk Management Software

Even if you only deal with a few third-party vendors, you still need a system to track them. The system you pick can be simple, such as a spreadsheet. It could be complicated, such as an integrated risk management platform.

When you deal with five or fewer vendors, a spreadsheet will suffice for organization. When you’re handling tens or hundreds of vendors, you’ll need a dedicated platform. Growing businesses also benefit from a program that can scale up. Your organization will want an integrated risk management platform to deal with this.

Consider the regulatory environment. Healthcare, finance and utilities might not have hundreds of vendors, but they are highly regulated. A fully featured platform tracks the sending and receiving of risk questionnaires, schedules penetration tests, sets up on-site vendor visits, manages and reviews assessments and generates compliance reports. If you deal with international vendors, the GDPR regulations practically necessitate third-party risk management software.

If you don’t have a solid tool, risks fall through the cracks. You can’t afford to let this happen in the high-stakes field of cybersecurity. Your reputation, partnerships and profitability are on the line.

Surveys and Questionnaires

You might not think of surveys and questionnaires as a tool, but they’re the centerpiece of a comprehensive third-party risk management program. A well-designed and thorough questionnaire for your vendors help you lower risks.

A pre-designed questionnaire may be a good place to start. However, you’ll need to tailor questions to your industry and risk profile. You may need to adapt the questionnaires for each supplier as your vendor list grows. For example, you may want to consider a vendor’s past performance in your new questionnaires.

Previously, it was best practice sending a questionnaire at the time of onboarding and at regular intervals. Third-party monitoring may change that, but it’s still important for most companies. Keep in mind that questionnaires are only a part of a third-party risk management program.

New threats and security performance changes may cause your questionnaires to be obsolete if you don’t update them or if you only rely on the results they deliver. Relying on questionnaires alone provides you with a Swiss cheese-style of security picture. Questionnaires should be part of your risk management tool profile but not the whole shebang.

Reasons to Use Third-Party Risk Management Software

Your time and resources are limited. Third-party risk management software helps you maximize both. Some reasons why your organization should use third-party risk management tools:

• Centralize: Use one system to eliminate duplication and track all active third parties.
• Leverage: Collaborate with suppliers and get the data you need in a single online interface.
• Determine: Identify risks objectively and determine which ones are associated with your most important suppliers.
• Track: Keep track of time-sensitive tasks, such as contract renewals. Reminders notify key participants of recurring tasks and dates with system alerts.
• Link: Pair supplier and vendor controls with outside regulations and internal policies to improve compliance.
• Engage: Use automated processes to connect with internal users.
• Stabilize: Ensure consistency in your data analysis with pre-designed surveys and forms, and send them through one digital interface.
• Deliver: Provide useful and engaging reports to senior managers and the board of directors with risk control matrices, risk summaries, heat maps and custom dashboards.

Security Ratings and Cyber Risk Management

Look for a third-party risk management tool that delivers constant monitoring. This process covers the gaps between surveys and questionnaires. You can track the vendor’s cyber risk management in real time.

A security rating is driven by data. It’s dynamic. It may change by the day, hour or even minute. Each rating is derived from verifiable and objective information from independent firms. The ratings enable you to quickly determine a supplier’s cybersecurity status. You can track changes in their performance and understand their main vulnerabilities.

Third-party risk management tools show security ratings in numbers that are easy to understand. They reflect current and actual risks. The ratings provide clear reference frames to share with stakeholders and internal key players.

Who Uses Third-Party Risk Management Software?

• Financial Institutions: Financial institutions use third-party risk management software to evaluate and manage the risks associated with working with external partners such as vendors, suppliers, contractors and other related entities.
• Insurance Companies: Insurance companies use third-party risk management software to monitor the financial health of their policyholders and assess their creditworthiness.
• Manufacturers: Manufacturers use third-party risk management software to ensure that their vendors are meeting compliance standards for product safety, labor regulations and environmental laws.
• Pharmaceutical Companies: Pharmaceutical companies use third-party risk management software to evaluate the safety profile of drug ingredients used by their partners in order to ensure proper quality control measures have been taken.
• Government Agencies: Government agencies can utilize third-party risk management software to review contracts with outside organizations, as well as identify potential risks associated with those agreements.
• Retailers: Retailers rely on third-party risk management software to assess the performance of vendors they purchase goods from, which helps them make informed decisions about who they should be doing business with.
• Healthcare Organizations: Healthcare organizations are using third-party risk management software to analyze supply chain data in order to optimize patient care while managing costs.
• Technology Companies: Technology companies often employ third-party risk management tools to understand the potential risks posed by new technologies or products developed by outside partners and suppliers before investing in them or putting them into production.
• Nonprofits: Nonprofits use third-party risk management software to ensure that donations, grants and other funds are being used appropriately and in accordance with their mission.

How Much Does Third-Party Risk Management Software Cost?

The cost of third-party risk management software can vary greatly depending on the features included and the size of the organization purchasing it. Generally, costs start at about $1,000 for the basic version of a software package and can exceed $10,000 for more comprehensive solutions. For larger organizations, full-service packages that include consulting services or industry-specific solutions can cost tens or even hundreds of thousands of dollars.

When considering a software solution, it's important to factor in implementation and onboarding costs as well. Depending on how complex your needs are, you might need to hire an implementation consultant to help you set up the system properly so that it meets all your criteria. You may also have to pay fees for training personnel on how to use the software and providing technical support if issues arise during its use.

On top of these costs, some vendors may require annual maintenance fees which entitle you to bug fixes and upgrades as they become available. Many providers also offer subscription plans so you only pay when you actually use the product rather than attempting to purchase a one-time license fee upfront. All these factors must be taken into account when calculating the total cost of third-party risk management software.

What Integrates With Third-Party Risk Management Software?

Third-party risk management software can integrate with a variety of different types of software. Many enterprise resource planning (ERP) solutions, such as Microsoft Dynamics and Oracle, provide advanced analytics and reporting capabilities that can be leveraged to assess risk associated with third parties. Human resources (HR) platforms, such as Workday, can also integrate with these systems to track employee behavior and ensure compliance with organizational policies. Additionally, customer relationship management (CRM) systems like Salesforce can help manage customer data in order to evaluate any potential risks associated with their relationship. Finally, many cybersecurity tools have the capability to detect malicious activity from external sources which may be related to a third party. All of these types of software are capable of integrating with a third-party risk management system to improve overall visibility into any risks posed by associated organizations or individuals.

Trends Related to Third-Party Risk Management Software

• Increased Automation: Third-party risk management software is becoming increasingly automated, with features like automatic scheduling for periodic reviews and automated alerts that can be triggered if a vendor’s risk profile changes.
• Customization: Thanks to the rise of cloud-based technology, third-party risk management software is now more customizable than ever before, allowing organizations to tailor their solutions to fit the exact needs of their vendors.
• Improved Security: With third-party risk management software, organizations can secure their data by ensuring that all of their vendors meet certain security requirements and are compliant with industry regulations and best practices.
• Artificial Intelligence: Artificial intelligence-enabled third-party risk management software is becoming more popular, as it can identify potential risks and quickly alert responsible parties to take action.
• Consolidation: With third-party risk management software, organizations can easily consolidate all of their vendors’ information into one central platform, giving them greater control over their vendor relationships and better visibility into their vendors’ security postures.

How to Choose the Right Third-Party Risk Management Software

1. Establish Your Goals and Requirements: Every organization has unique risk management needs, so it’s important to have a clear understanding of what your goals are and the specific requirements you need to address. Make sure you know exactly what you want the software to do before choosing a solution.
2. Research Different Solutions: Once you’ve established your goals and requirements, start researching different solutions available on the market. Consider features such as risk assessment capabilities, incident tracking, control mapping, user access rights, and reporting tools in order to find one that meets all your needs. Compare third-party risk management software using the tools on this page and filter by user reviews, features, pricing, integrations, and more.
3. Compare Prices and Test Demo Versions: Don’t forget to compare pricing of different options from reputable vendors before making a final decision. Also consider testing out demo versions or talking to other organizations who use the same solution for more information about how it performs in practice.
4. Ensure Vendor Reputation and Support Services: Don’t forget to evaluate vendor reputation when selecting third-party risk management software - look into customer reviews, financial stability and technical support services they offer before making a purchase decision.