Many companies are not dedicating proper resources to assess third-party risks, and those that are still lack confidence in their programs, according to Prevalent.
Supply chain disruptions
As a result, there are real consequences including loss of revenue, loss of productivity, and loss of reputation – all of which can jeopardize resiliency and are amplified given today’s supply chain concerns related to COVID-19.
“Organizations are starting to ask the question about what happens to them if their supply chain partners go out of business. Sadly, most companies don’t have the risk visibility into their supply chains to answer that question,” stated Brenda Ferraro, VP of third-party risk at Prevalent.
“How can they expect to adequately manage their own risk without understanding the risks vendors and partners pose?”
Key findings from the report
- Lack of confidence in the program inhibits results: 54% of organizations have some meaningful experience in conducting third-party risk assessments, yet only 10% are extremely confident in their programs.
- Significant consequences: 76% of respondents said that they experienced one or more issues that impacted vendor performance – resulting in a loss of productivity (39%), monetary damages (28%) and a loss of reputation (25%).
- Unsatisfactory number of assessments: 66% of respondents say they should be assessing more than three-fourths of their top tier vendors but aren’t doing so.
- Costs, resources and lack of process are inhibitors to success: Lack of resources (74%), cost (39%) and insufficient processes (32%) are keeping respondents from assessing all their top-tier vendors.
- No one seems happy with their existing toolset: Satisfaction levels among existing tools hovers in the 50% range, and weighted average of satisfaction caps out at 3.8/5.0. GRC tools have an especially long way to go with a 41% satisfaction rate.
Third-party risk management program
Growing and maturing an adaptable and agile third-party risk management program that is resilient in times of crisis doesn’t have to be a complex and time-consuming process. The report concludes with five recommendations to jump start vendor risk activities:
- Develop a programmatic process
- Build a cross-functional team that extends beyond risk and compliance
- Be comprehensive without being complex
- Maintain options for assessment collection and analysis for agility
- Complement your decision-making with risk-based intelligence