Key Things to Look for in Third-Party Risk Management Software
Third-party risk management (or TPRM) continues to increase in popularity because more and more organizations are seeking cost-effective ways to get the job done without the overhead associated with using in-house resources. This has spurred a rise in the number of companies that are turning to third-party risk assessment software platforms. But with many options available, selecting the right software for your needs can be a challenge.
Why Use Third-Party Risk Management Software?
With every new business relationship, there are downsides. For contractors, vendors, and other third-parties, that downside often centers around bringing in new, unfamiliar people into the fold — people who lack a vested interest in and or are unaware of the company’s long-term profitability and reputation.
The average permanent employee poses a much lower risk to a business because they rely solely upon that company for their paycheck. If they were to sell their employer’s trade secrets to a competitor — resulting in financial losses — there is a good chance the employee would feel the negative trickle-down effects. But a vendor or contractor may have no such concerns; they have the ability to simply move on and accept a new client.
This underscores the importance of risk mitigation and third-party risk management software offers an efficient and cost-effective solution. Third-party risk assessment should entail a multi-pronged approach, of course. To get the most from this technology, it is prudent to use third-party risk management software in conjunction with the services of TPRM consultants and analysts.
Selecting Third-Party Risk Management Software: What to Look For
There are a few features and functionalities that you should seek as you consider the many different third-party risk management software platforms.
Seek Third-Party Risk Assessment Software That Uses Questionnaires
The top third-party risk management software interfaces use a questionnaire-based approach. A third-party is asked to complete a questionnaire which is subsequently entered into the system for analysis.
Ideally, you should have the ability to custom-tailor the questionnaires with ease. The most effective questions are those that have been adjusted to suit the organization’s industry and the nature of the vendor or contractor’s work. A detailed, comprehensive questionnaire will go a long way toward bringing positive results.
This rather sophisticated technology works by reviewing the questionnaire answers for key terms and phrases. There exist a variety of cues that have been found to signal elevated risk; these cues can be very subtle and many emerge subconsciously. Humans can easily miss the more subtle warning signs, but it is far harder to deceive today’s sentiment analysis technology.
Choose Third-Party Risk Management Software With Well-Developed Analytics
Analytics drive the best TPRM software platforms and the most effective analytics platforms are driven by machine learning and artificial intelligence (AI) technology.
Machine learning technology, in particular, is very good at identifying trends and patterns. In response, the software’s algorithm is updated so it becomes increasingly more accurate over time. It is a major advantage to have software that is constantly improving.
Analytics and metrics also serve as hard data that your consultants can sink their teeth into. This allows you to make the most of your software and your analysts/consultants. This data can be extremely useful when developing policies and TPRM-related strategies.
Pick Third-Party Risk Management Software With Comprehensive Metrics and Reports
Human analysts and TPRM consultants are an important part of any third-party risk management strategy. Software only gets you so far. Humans are required to analyze, strategize and develop protocols and policies that can be used to minimize risk long term.
The best risk management platforms will generate reports and metrics for analysis. Look for traits like:
- Lots of available data points from a variety of sources;
- Clear visual representations of data, such as graphs, charts and tables; and
- The ability to generate reports in a variety of formats.
The more data and data visualization tools that are available to you, the better.
Look for a Third-Party Risk Management Software Platform With Background Check Integration
When possible, opt for a software platform that includes integrations with background check technology. This allows you to import and centralize all pertinent information about existing and prospective vendors, contractors, and other third parties. Centralization helps prevent a situation where a critical fact is overlooked.
In cases where background check platforms are not integrated, there should be a notation or memo capability that allows staff to include written notes and attach a file to a third-party’s profile.
Picking Third-Party Risk Management Software With Great Reviews
User experience matters, especially when you are the user in question! Therefore, it’s wise to select a risk assessment software platform with positive testimonials and reviews from a large number of users.
It may be convenient to browse through the testimonials on a software developer’s website, these comments can be easily fabricated. But you can always reach out to the individuals to verify their opinions if sufficient information is provided (like full name, position, company name and company location.)
Third-party review sites can be a great source of honest, legitimate reviews on a software platform’s features and user experience, among other qualities.
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Maximizing ROI on Risk Management Software With Human Talent
To get the most from third-party risk management software, you need human consultants and analysts — individuals who can perform additional supplementary research and analyze all available information to make data-driven recommendations. Combining human talent and technology consistently delivers the best results and the greatest ROI.
The reality is that third-party risk management is essential for success in today’s business world because nearly every company — large and small — works with third parties in some way, shape, or form. It’s easy to see why too because third-party service providers, contractors and vendors provide major benefits with a competitive edge that an organization cannot overlook. The right software empowers you to evaluate third-party risks at large scale and with tremendous accuracy.
At iTech, we understand the TPRM-related concerns that today’s companies confront and we offer multi-faceted solutions. Contact iTech today to learn more about our approach to third-party risk management and related IT solutions.