Third-Party Risk Management

Third-party risk management refers to the strategies and tools brands use to evaluate the potential risk of partnering with a third-party vendor.

What Is Third-Party Risk Management?

With complex supply chains and collaborative selling options, many brands today partner with various vendors to streamline their work and improve their sales. Third-party risk management is the process of assessing the risk involved with each partnership.

Generally, brands evaluate their third-party vendors in terms of:

Supply chain logistics, looking for a history of errors, delays, or miscommunication;
Reputation, including the vendor's values and history of customer engagement;
Cybersecurity risks and compliance with state or federal regulations;
Ethical concerns; and
Financial concerns.

Conducting an in-depth third-party risk management process can be time-consuming for many brands, which is why many use automated systems to streamline the process and ensure any findings are relevant and accurate to the brand.

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