Best Practice for Beginning your Third Party Screening
Most of the organizations are heavily dependent upon third parties for enhanced profitability, competitive advantage and reduced cost. But you should know that working with third parties brings along different types of risk related to regulations, reputation, strategy, finance, and security. Because of the penalties and security risk coming out of disruption in the supply chain, identity theft, non-compliance, nowadays, most of the business are taking third party screening very seriously.
Third parties are not limited to a particular place and that’s why an interruption in the supply chain from the third party end can cause disruption in your business as well. If your third party located in Japan encounters an earthquake then you might face huge interruption your business and especially if you don’t have a continuity plan to deal with such situations.
That’s why companies are now moving beyond local survey and compliance methods to ensure the regularity and minimize security risk from third parties. Nowadays, most of the companies are now moving beyond basic screening method and avoiding unethical practices, protecting sensitive IT information and maintaining a safe and healthy environment. So, let’s look at some of the best practices which you can follow for beginning your third party screening process in a seamless and effortless way.
Assess third party risks
You should know that different third parties relations bring along different types of risk and that’s why it is important to manage and assess all possible risk related to your third party. Most of the risks associated with your third parties are multidimensional and they are spread among suppliers, vendors, contractors and other different parties. In order to begin your third party screening process, you should identify different types of risks which are related to politics, contract, law, and non-compliance. Along with the identification of these types of risk, you should also take a look at the different factors which increases the chances of such risks related to the third party.
Follow a due-diligence program
If you want to understand your third party in a better way then it is very necessary to conduct a due-diligence program. Most of the leading firms are adopting a risk-based approach to third-party due diligence. You can begin your journey by classifying different third parties on the basis of different risk categories. These risk categories should be based on product or service, location, country, and other important factors. You should know that the level of due diligence is totally dependent upon the risk score of the third party.
Never miss the fourth party
Most of the businesses make the mistake of not focusing on the fourth party in their third party screening and that can ruin your whole plan. You should always check whether the product or service is being directly provided by the third party or there is involvement of a fourth party in the supply in the supply chain. You should always contractually bind third parties to inform you about any involvement of the fourth party in the supply chain. You should never miss to know the details of the fourth party and include it in your third party screening process.
Monitor IT vendor risk
Most of the third-parties use sensitive company information in order to deal with your business line and that’s why IT security cases are increases day by day. You should always keep an eye on IT vendor risk and keep monitoring it on a regular basis. You can classify different vendors on the basis of their risk profile and then adopt different monitoring program for all of them. You can also use external sources to know more about the IT vendor risk and manage it in a better way.
So, if you are looking forward to beginning your third party screening process then it is very much necessary to be precise and managed. You can follow the practices mentioned in this blog post and get the expected results from your third party screening program.