How a third party risk assessment can help you in decision making about outsourcing? Moreover, what are the best practices to implements the risk assessment?
Introduction About The Third Party Risk Assessment
Because outsourcing products or services may result in a minor or major risk. So you must fully understand what are the possible risk?
For further ideas, let’s explain the third party and the risk assessment separately.
A Thir-party is a company that your company has written and agreement. What agreement? That you outsource a product or service on account of your organization.
However, this third party may have various risk levels in your organization. It could be a minor risk or a major major risk.
So how could it happen? You provide the details or information that could be crucial in your part.
Moreover, this crucial part can not be handle properly by the third-party.
So what are the possible third-party vendor that you could have a contract with? Here are the following:
- Shred provider
- Landscaping company
- Core professor
- Office Supplier
- Telephone Company
On the other hand, risk assessment is evaluating the risk or vulnerabilities. The risk and vulnerabilities you can get in outsourcing from another company.
The Reason For Implementing A Third Party Risk Assessment
There are so many reasons to implement the risk assessment. However, we will only tackle the top three reasons.
Here are the following:
- It is an administrative requirement
Regulators are demanding organizations to acknowledge that there is a possible risk in third party agreements. Moreover, the risk assessment is not for the third-party company alone.
It is applicable to the services and product level. This is how it is completed.
- The assessment will guide you in establishing the specific concepts you want to monitor.
So after the assessment, you might find some areas of the third party is high risk. Just an example is:
- Disaster recover planning
- Business continuity.
After discovering this you may consider talking to your potential third-party.
- It is the most beneficial practice
The first step to determine the undesired risk. They are like your indicator controls that are significant in your company.
Best Practices On Implementing Your The Risk Assessment
The following are the practices you can apply in your third party risk assessment:
- Learning your risk desire – by doing this you can use or create a questionnaire. This questionnaire should be asked to your potential third party. Moreover, make sure that it reflects your company’s risk desire.
- Categorizing your vendors – build a method on how you want them to be a label. So the result will show who the most are risky and not.
- Develop the data you gather – Although gathering data is the toughest. But, it will develop the quality of your questionnaire.
- Makes the assessment easier to handle – so do not make it complicated. It can help to fasten the assessment.
- Do the assessment to know the performance, not just the risk – assessment is not for looking for flaws. But, also, determining the capability of your third-party products or services.