Third-Party Risk Management

What Defines a Strong TPRM Strategy in 2025? 🤔 A mature TPRM program in 2025 isn’t just about checking boxes, it’s about building a defensible, risk-based framework that withstands scrutiny from regulators, auditors, and internal stakeholders alike. As regulatory expectations evolve globally, the benchmark for "compliance" is increasingly tied to demonstrable, ongoing due diligence, monitoring, and governance. Here’s what that looks like in practice: Key Pillars of a TPRM Strategy 1. Centralized Third Party Inventory: Maintain a dynamic inventory of all third parties, with visibility into their services, access to systems/data, and criticality to business operations. 2. Risk-Based Segmentation: Classify vendors by risk tiers (e.g., critical, high, moderate, low) based on the sensitivity of data and impact on operations. This enables proportional oversight. 3. Standardized Due Diligence and Risk Assessments: Use consistent, framework-aligned assessments (e.g., NIST CSF, ISO 27001, SIG questionnaires) for onboarding and periodic reviews. Tailor depth and frequency to risk level. 4. Continuous Monitoring: Leverage technology (e.g., security ratings, threat intelligence, performance dashboards) to track vendor health in real time, not just point-in-time reviews. 5. Strong Contractual Controls: Embed clear requirements in contracts around data protection, right to audit, breach notifications, and fourth-party oversight. Contracts are your enforcement tool. 6. Incident Response and Contingency Planning: Include third parties in your incident response playbooks. Simulate breach scenarios to test coordination, escalation, and communication processes. 7. Cross-Functional Ownership and Governance: Engage legal, procurement, cybersecurity, and business unit leaders throughout the lifecycle. Risk ownership must be shared, not siloed. To demonstrate that your program is more than just policy on paper: - Documentation – Keep detailed records of risk assessments, remediation plans, monitoring reports, and vendor interactions. - Audit Trails – Ensure transparency in decision-making: how vendors are approved, how exceptions are granted, and how issues are addressed. - Performance Metrics – Track and report KPIs (e.g., % of vendors with updated risk reviews, average remediation time) to show continuous improvement. - Regulatory Mapping – Align your TPRM framework to applicable regulations (e.g., OCC, DORA, EBA, MAS), and document how requirements are being met. Board Reporting – Periodically update senior management and the Board on third-party risk exposure, residual risk, and mitigation actions. In 2025, "being compliant enough" means being able to show that your TPRM program is consistent, risk-aligned, and operationalized. It’s not about perfection, it’s about visibility, defensibility, and accountability. #2025 #riskmanagement #riskassessment #regulations #compliance #occ #3prm #boardreporting #businessrisk #residualrisk #riskmitigation #tprm

Third-Party Risk: The Hidden Cybersecurity Battlefield in Modern Supply Chains In our interconnected digital ecosystem, your security posture is only as strong as your weakest vendor. Modern enterprises rely on 100s of third-party vendors, creating an exponentially expanding attack surface. Supply chain attacks have become the preferred vector for sophisticated threat actors. Instead of targeting well-defended enterprises directly, attackers exploit vulnerabilities in trusted vendors to simultaneously breach hundreds of downstream organizations. Game-Changing Examples SolarWinds (2020): Compromised software updates affected 18,000+ customers including Fortune 500 companies and government agencies, demonstrating how a single vendor breach cascades across entire sectors. MOVEit (2023): A single vulnerability led to data breaches affecting over 600 organizations globally, showcasing the massive scale of modern supply chain impacts. Why Third-Party Risk Monitoring is Critical Continuous Visibility: Traditional annual assessments are insufficient. Organizations need real-time monitoring of vendor security posture, breach notifications, and compliance status changes. Risk Amplification: When attackers target managed service providers or software vendors, the impact multiplies across all their clients. One compromised vendor can expose thousands of organizations simultaneously. Regulatory Liability: With GDPR, CCPA, and emerging supply chain regulations, organizations face increasing liability for third-party security failures. Proactive monitoring demonstrates due diligence. Building Effective Defense Continuous Assessment: Implement real-time vendor risk scoring across your entire ecosystem Zero Trust Extension: Apply least-privilege access controls to all third-party connections Incident Response Integration: Ensure your IR plans account for vendor breaches with clear communication protocols Contractual Protection: Update vendor agreements with security requirements and liability provisions The Bottom Line Organizations can no longer treat vendor risk as procurement afterthought. The question isn't whether your supply chain will be targeted — it's whether you'll detect and respond effectively when it happens. The strongest security programs extend beyond organizational boundaries to create defensible ecosystems, not just defensible enterprises. #ThirdPartyRisk #TRPM #SupplyChainAttack #CyberSecurity

The IIA has released the Third-Party Topical Requirement. It sets a clear baseline for how internal auditors must assess risks linked to vendors, suppliers, contractors, and even downstream partners. Why does this matter? Because working with third parties always comes with risks: strategic, operational, reputational, financial, legal, cyber, and even sustainability. When they fail, your organization suffers. The key reminder: Outsourcing the work does not mean outsourcing accountability. The primary organization always owns the risk. The requirement covers three big areas: ↳ Governance: Is there a formal approach, clear roles, policies, and timely reporting on third-party performance and risks? ↳ Risk management: Are risks identified, prioritized, and reviewed regularly with proper responses and escalation processes? ↳ Controls: Is there due diligence, strong contracts, onboarding, ongoing monitoring, incident management, and structured offboarding? Actionable Insights: ↳ Treat third-party risks as part of your risk universe. ↳ Don’t just rely on contracts. Test how effective monitoring and escalation processes really are. ↳ Keep an updated inventory of all third-party relationships. It sounds basic, but many organizations miss this. ↳ Make sure third-party offboarding includes revoking access and securing sensitive data. Reference: Third -Party Topical Requirement. 2025. The Institute of Internal Auditors, Inc (link to download in the comments) #internalaudit #ITaudit #digitaltransformation

“If you haven’t mapped your dependencies, you haven’t mapped your risk.” Because even your most vetted vendor might be your weakest unseen exposure. “The weakest link isn’t always external. Sometimes, it’s the one you trust most.” Yesterday’s compliant partner might not be ready for today’s threat landscape. 📖 STORY: One Vendor. One Missed Patch. One Costly Incident. A critical infrastructure operator recently experienced a brief but high-impact shutdown. The trigger? A third-party supplier had remote access for routine maintenance. But their endpoint hadn’t been patched in over six months. No malware. No breach. Just unmonitored access in a flat network. And just like that, resilience took a hit. 🛑 THE REAL RISK: Shadow Dependencies You can’t mitigate what you don’t see. 🔸 Outdated vendor infrastructure 🔸 Overlapping credentials across suppliers 🔸 No security validation on updates 🔸 Zero visibility into multi-tier dependencies This isn’t just third-party, it's nth-party risk. And when something breaks, you’re the one holding the fallout. 💡 INSIGHT: True Security Posture = Internal + External + Invisible We’ve seen this pattern across OT, IT, and IoT environments. The strongest teams do things differently: ✅ They map integration points not just assets ✅ They validate access controls in real time ✅ They track supplier risk with live dashboards ✅ They treat vendor reviews as a security control, not a formality 🔄 MINDSET SHIFT ❌ “They passed our audit.” ✅ “Audit is history. Visibility is reality.” ❌ “We trust them.” ✅ “Trust is verified continuously.” ✅ TAKEAWAYS 🔸 Run third-party dependency reviews like you run internal assessments 🔸 Extend visibility beyond your walls into supplier ecosystems 🔸 Include vendor breakdowns in red-team scenarios 🔸 Shift from contract confidence to operational assurance 📩 CTA Want to find out which vendors are silently raising your risk profile? DM me for Microminder’s Supply Chain Risk Mapping Kit the same toolset used across infrastructure, healthcare, F&B, and manufacturing to cut external risk without slowing the business. 👇 What’s the biggest “invisible risk” you’ve uncovered? #CyberLeadership #VendorRisk #Microminder #SupplyChainSecurity #OperationalResilience #ThirdPartyRisk #CISO #RiskMapping #ResilienceByDesign #SecurityEcosystem

A recent $10M settlement with the Federal Trade Commission (FTC) demonstrates that although it can be reasonable for organizations to rely on third-parties to handle compliance issues, it is still the organization's responsibility to provide the third-party with sufficient accurate information for the third-party to get compliance right. See https://lnkd.in/eMCN9Vtn. In this case, a major entertainment company faced allegations of violating the Children’s Online Privacy Protection Rule (COPPA) by mislabeling child-directed videos on a popular platform. The mislabeling enabled unlawful data collection from children under 13, triggering targeted advertising and exposure to age-inappropriate features. Despite platform-level warnings and prior enforcement actions, the company continued to rely on default settings and failed to review individual content classifications—ultimately leading to regulatory penalties and mandated reforms. This case underscores a critical lesson: outsourcing compliance tasks does not outsource accountability. Here are key tips for organizations relying on third-parties for compliance: ✅ Provide Accurate, Timely Information Third-parties can’t ensure compliance if they’re working with incomplete or outdated data. ✅ Clarify Roles and Responsibilities Ensure contracts and workflows explicitly define who is responsible for what—and when. ✅ Avoid Blanket Defaults One-size-fits-all settings (like channel-level designations) may be convenient but can lead to systemic errors. ✅ Monitor and Audit Regularly Establish review protocols to catch misclassifications or lapses before regulators do. ✅ Respond to Warnings Promptly If a platform flags issues, treat it as a compliance issue—not a suggestion. ✅ Train Internal Teams Even if external vendors handle execution, internal staff must understand the compliance landscape. ✅ Document Everything Maintain records of decisions, communications, and updates to demonstrate diligence. ✅ Stay Ahead of Tech Shifts Emerging tools like age assurance technologies may reshape compliance expectations—be proactive, not reactive. ✅ Learn from Enforcement Trends Regulatory actions offer a roadmap of what not to do. Use them to strengthen your own practices. Compliance is a shared responsibility. Don't just assume the third-party will always get it right!

Third-party risk refers to the potential threats or vulnerabilities that arise from relying on external entities, such as vendors, suppliers, contractors, or partners, to provide services, products, or support. These risks can affect an organization’s operations, reputation, compliance, and overall security posture. ### Key Aspects of Third-Party Risk: 1. **Types of Risks**: - **Operational Risks**: Disruptions to services due to failures or issues with third-party providers. - **Financial Risks**: The potential for financial loss due to the instability of third-party organizations. - **Reputational Risks**: Damage to an organization’s reputation resulting from the actions or failures of a third party. - **Compliance Risks**: Non-compliance with regulations and standards due to third-party actions, which can result in legal penalties. 2. **Assessment and Management**: - **Due Diligence**: Thorough investigation and evaluation of potential third parties before establishing a relationship. - **Contractual Agreements**: Clearly articulated contracts that define expectations, responsibilities, and liabilities. - **Regular Audits and Monitoring**: Continuous assessment of third-party performance and adherence to compliance requirements. - **Risk Mitigation Strategies**: Developing contingency plans and response strategies to address identified risks. 4. **Best Practices**: - Establish a dedicated team to manage third-party relationships. - Prioritize risks based on the criticality of the third party to your business operations. - Foster open communication and collaboration with third-party vendors regarding risk management. ### Conclusion Managing third-party risk is critical for organizations to ensure operational resilience, protect sensitive information, and maintain compliance with regulations. A proactive approach that includes thorough assessment, monitoring, and robust risk management strategies can help mitigate potential threats and safeguard the organization's interests.

☢️Manage Third-Party AI Risks Before They Become Your Problem☢️ AI systems are rarely built in isolation as they rely on pre-trained models, third-party datasets, APIs, and open-source libraries. Each of these dependencies introduces risks: security vulnerabilities, regulatory liabilities, and bias issues that can cascade into business and compliance failures. You must move beyond blind trust in AI vendors and implement practical, enforceable supply chain security controls based on #ISO42001 (#AIMS). ➡️Key Risks in the AI Supply Chain AI supply chains introduce hidden vulnerabilities: 🔸Pre-trained models – Were they trained on biased, copyrighted, or harmful data? 🔸Third-party datasets – Are they legally obtained and free from bias? 🔸API-based AI services – Are they secure, explainable, and auditable? 🔸Open-source dependencies – Are there backdoors or adversarial risks? 💡A flawed vendor AI system could expose organizations to GDPR fines, AI Act nonconformity, security exploits, or biased decision-making lawsuits. ➡️How to Secure Your AI Supply Chain 1. Vendor Due Diligence – Set Clear Requirements 🔹Require a model card – Vendors must document data sources, known biases, and model limitations. 🔹Use an AI risk assessment questionnaire – Evaluate vendors against ISO42001 & #ISO23894 risk criteria. 🔹Ensure regulatory compliance clauses in contracts – Include legal indemnities for compliance failures. 💡Why This Works: Many vendors haven’t certified against ISO42001 yet, but structured risk assessments provide visibility into potential AI liabilities. 2️. Continuous AI Supply Chain Monitoring – Track & Audit 🔹Use version-controlled model registries – Track model updates, dataset changes, and version history. 🔹Conduct quarterly vendor model audits – Monitor for bias drift, adversarial vulnerabilities, and performance degradation. 🔹Partner with AI security firms for adversarial testing – Identify risks before attackers do. (Gemma Galdon Clavell, PhD , Eticas.ai) 💡Why This Works: AI models evolve over time, meaning risks must be continuously reassessed, not just evaluated at procurement. 3️. Contractual Safeguards – Define Accountability 🔹Set AI performance SLAs – Establish measurable benchmarks for accuracy, fairness, and uptime. 🔹Mandate vendor incident response obligations – Ensure vendors are responsible for failures affecting your business. 🔹Require pre-deployment model risk assessments – Vendors must document model risks before integration. 💡Why This Works: AI failures are inevitable. Clear contracts prevent blame-shifting and liability confusion. ➡️ Move from Idealism to Realism AI supply chain risks won’t disappear, but they can be managed. The best approach? 🔸Risk awareness over blind trust 🔸Ongoing monitoring, not just one-time assessments 🔸Strong contracts to distribute liability, not absorb it If you don’t control your AI supply chain risks, you’re inheriting someone else’s. Please don’t forget that.

Avoiding Common Pitfalls in GHG Inventories: A Guide to Credibility and Compliance:   As climate disclosures become central to ESG reporting, group companies with multiple operational units face mounting pressure to develop accurate and credible greenhouse gas (GHG) inventories. However, the complexity of consolidating emissions data from diverse units often leads to common mistakes that can result in misleading disclosures, reputational risks, and accusations of greenwashing.   One of the most frequent issues is inconsistent boundary definitions. Different subsidiaries may employ varying approaches, such as operational control in one and equity control in another, which can lead to aggregation errors. Another common mistake is the misclassification of emissions scopes, particularly the confusion between direct (Scope 1), indirect energy (Scope 2), and value chain emissions (Scope 3). This often stems from inadequate training or a lack of clear guidance.   Data completeness is another challenge. Smaller units or remote sites may fail to report energy or fuel consumption, leading to gaps in inventory coverage. Additionally, inconsistencies in emission factors, particularly when using outdated or non-standard sources, can skew results and impair comparability.   Double-counting emissions, especially from inter-unit energy transfers, and poor documentation of assumptions and methodologies further compromise inventory reliability. Perhaps most concerning is the absence of internal review mechanisms or third-party assurance, which creates room for intentional or unintentional manipulation.   To overcome these issues, companies, especially SMEs, must adopt a unified GHG accounting protocol across all units, assign clear data ownership at each level, and establish centralized data systems with QA/QC checks. Integrating external verification adds a layer of credibility and helps identify blind spots.   A robust GHG inventory is more than a compliance tool; it is a strategic asset. It not only supports effective decarbonization planning but also enhances investor trust and long-term resilience. For group companies, consistency, transparency, and accountability are the pillars of a credible climate disclosure journey.     Reach out to us for a compelling business case on climate action and practical strategies to simplify and strengthen your climate-related disclosures for better stakeholder trust: Sai Bhaskar Veluri, vsb@bsenvitech.com, mktng@bsenvitech.com Mob: +91 9677003778   #GHGemissions #Emissioninventory #Greenwashrisk #Climatedisclosures #Climateaction #NetZero #Bluegreen #BSENVITECH #Saibhaskarveluri 

The Importance of Third-Party Security ……………………… First let us understand Third-Party Security Risks: 1. Supply Chain Attacks: Cybercriminals often target smaller, less secure vendors as a backdoor into larger organizations. A breach at a third-party vendor can provide attackers with access to your systems, data, and networks. 2. Data Breaches: Sharing sensitive information with third parties—whether it’s customer data, intellectual property, or financial records—carries the risk that this data could be exposed if the vendor’s security measures are inadequate. 3. Compliance Violations: Many industries are subject to stringent data protection regulations (e.g., GDPR, NCA). If a third-party vendor fails to comply with these regulations, your business could face legal penalties, even if the breach occurs outside your organization. 4. Operational Disruption: A cyber attack on a critical supplier or partner can disrupt your supply chain, leading to delays, increased costs, and loss of business continuity. ……………………… Key Strategies for Strengthening Third-Party Security: 1. Conduct Thorough Vendor Risk Assessments: Before engaging with a third-party vendor, conduct a detailed risk assessment to evaluate their security posture. This assessment should include reviewing their cybersecurity policies, data protection practices, and history of security incidents. 2. Implement Strong Contractual Agreements: Ensure that your contracts with third-party vendors include specific security requirements. This may involve mandating the use of encryption, compliance with relevant regulations, regular security audits, and immediate notification of any security incidents. Clearly outline the consequences of non-compliance to hold vendors accountable. 3. Continuous Monitoring and Auditing: Third-party risk management is not a one-time effort. Regularly monitor and audit your vendors to ensure they are maintaining the required security standards. Automated tools can help in tracking vendor performance, detecting potential vulnerabilities, and ensuring compliance with contractual obligations. 4. Limit Access to Sensitive Data: Apply the principle of least privilege by granting third-party vendors the minimum level of access necessary to perform their duties. Restrict access to sensitive data, and regularly review access permissions to ensure they align with current business needs. 5. Develop a Comprehensive Incident Response Plan: In the event of a security breach involving a third-party vendor, a well-defined incident response plan is critical. This plan should include protocols for communication, containment, and remediation. Collaborate with your vendors to ensure they have their own incident response plans that align with your requirements. ……………………… Ensuring that your third-party vendors are secure is not just a good practice; it’s a critical component of a resilient and successful business strategy. ……………………… #cybersecurity #cyber #third_party

🚨📝 July 15, 2025. #DORA #ThirdPartyRisk #OperationalResilience. The ESAs (EBA, EIOPA, ESMA) published a new guide under the DORA on the oversight of Critical Third-Party Providers (CTPPs). The message is clear: If you are critical to financial services ICT, you are now under direct EU-level oversight. 🔍 Key Takeaways: ▶️ CTPPs face annual designation based on systemic importance, substitutability, and client base. Criteria include 6 quantitative and 5 qualitative factors. ▶️ Oversight includes inspections, general investigations, and data requests with potential penalties for non-cooperation. ▶️ Non-compliance = public naming. If a CTPP fails to act on recommendations without valid reasons, the ESAs will disclose this publicly. ▶️ ESAs can inspect third-country premises - if conditions are met and local authorities don’t object. ▶️ CTPPs must designate a coordination point or EU subsidiary with authority, staff, data access, and inspection-readiness. ▶️ Joint Oversight Venture (JOV) now operational - ESAs have integrated teams working together with national authorities for seamless supervision. ▶️ Follow-up is serious: CTPPs must share remediation plans and progress reports. Supervisors may ask financial entities to terminate contracts if risks persist. 🤷♂️ The So What? #CTPP teams should: ✅ Assess your criticality status - are you or your providers potentially in scope? ✅ Establish or review your EU coordination point/subsidiary - it must meet ESA expectations. ✅ Prepare for oversight - inspections, RfIs, and documentation requests are coming. ✅ Strengthen ICT risk management - especially in subcontracting, patching, encryption, and incident handling. ✅ Track recommendations & document remediation – visibility and accountability are key. 📩 Questions about how this affects your role as a #CASP, #bank, #paymentinstitution, or #CTPP? Happy to chat in DMs or connect you with our advisory partners. #DORA | #CyberResilience | #ICTThirdPartyRisk | #ESMA | #EBA | #EIOPA | #FinancialServices | #Compliance | #RegTech | #FinvisorFintechPartners