Third-Party Risk Management (TPRM) is the structured approach to managing risks posed by external partners, such as vendors, cloud providers, contractors, or affiliates. These third parties often have access to company systems, customer data, or operational infrastructure, creating potential vulnerabilities.

Why It’s Important

With increasing regulatory scrutiny under laws like GDPR, CCPA, and HIPAA, companies are held accountable for how their third parties handle personal data. A breach or compliance failure by a vendor can expose your organization to legal penalties and reputational harm. TPRM ensures organizations evaluate, monitor, and control these risks proactively.

Key Practices and Benefits

• Vendor Risk Assessments: Evaluate vendors before engagement

• Due Diligence: Check security certifications, privacy policies, and data handling practices

• Contractual Safeguards: Include data processing agreements (DPAs) and SLAs

• Ongoing Monitoring: Continuously assess third-party performance and compliance

• Risk Mitigation: Identify high-risk vendors and apply controls or alternatives

Strong TPRM strengthens your data governance, reduces legal exposure, and boosts stakeholder trust.