The Benefits of Automating Your Mortgage Firm’s Third-Party Risk Management Processes

Third-party risk management — or TPRM —  is a very real and very significant component of a mortgage firm’s broader risk management and mitigation strategy. Mortgage firms straddle two industries — the real estate industry and the financial space — and both are highly regulated and highly vulnerable to a broad range of risk factors and vulnerabilities. This makes for a complex risk management equation that can be difficult to handle in an efficient way. There is a solution, though, and it comes in the form of automation.

So do you answer the question of how is automation used within the context of third-party risk management? And what are the benefits of leveraging automation technology in conjunction with your mortgage firm’s risk management efforts? 

What is Third-Party Risk Management?

To understand the benefits of third-party risk management automation, it’s important that you have a solid understanding of TPRM and all that it entails. 

Third-party risk management refers to the practice of identifying, managing, and mitigating threats that arise from engagements with external third parties such as vendors, contractors, and subcontractors. In the course of normal business, a mortgage firm may work with dozens of different contractors and vendors. For instance, a mortgage lending company may opt to deploy a new enterprise software platform but in order to do so, they must work with third parties such as the development team, an implementation and deployment team, and a training team that comes in to provide employees with guidance as they learn to use the new technology. Individuals in each of these three roles would have “behind the curtain” access, so to speak, which is what makes third parties so very challenging from a risk management perspective. We’re not talking about a hacker who has to penetrate a mortgage company’s firewalls and other security infrastructure components. Third parties are often given direct (or nearly direct) access to very sensitive systems and data. In a setting such as a mortgage firm, it is not uncommon to have clients’ personal info and their financial information — sensitive data that is highly sought after by the criminal element. A solid third-party risk management strategy is necessary if you’re going to protect your clients and their data. TPRM focuses on screening individuals and even entire companies to determine if they pose a risk to your mortgage firm, your clients, and your interests. And since many third-party relationships extend beyond a single interaction or engagement, a good third-party risk management strategy will include monitoring. This monitoring allows a mortgage firm to determine if a third party’s threat level changes over time. 

How Do You Automate Third-Party Risk Management? 

Automation may not be the first thing that comes to mind when you consider third-party risk management for your mortgage firm.  But you can see significant benefits from TPRM automation. When we refer to automation, it falls within the scope of business process automation or BPA. In the case of BPA, various manual process flows are automated in part or in full. This brings many benefits such as improved accuracy, better speed, and a reduction — or even a complete elimination — of human error. 

In the context of third-party risk management, process automation can be used in a variety of different ways, including the following. 

Background Check Automation

Background checks and reputation checks are important aspects of the TPRM equation. By automating this process, you can rapidly evaluate a third party with unmatched accuracy. It’s even possible to configure your automation to perform periodic re-checks, making it much easier to perform monitoring for third parties with whom you engage on a long-term basis. 

Threat Assessment Automation

The TPRM assessment process is critical for effective risk management and mitigation. During the assessment process, you must consider a variety of factors — including information from a range of sources — as you work to arrive at a threat assessment for a specific individual or business. It’s an arduous task, to say the least, but business process automation can streamline and simplify matters in a dramatic way. A human may spend many hours performing research and collecting information before they can arrive at an accurate threat assessment for that party. But BPA technology can perform the same task in a matter of seconds with an extremely high degree of accuracy. 

TPRM Threat Prioritization

As threats are identified, you must assess those threats to determine how they rank relative to the other risk factors and vulnerabilities that your mortgage firm is currently confronting. With third-party risk management, threat prioritization can be quite challenging because there are so many factors at play. Plus, each of these factors or considerations must be weighted to some degree, adding yet another layer of complexity to the equation. Needless to say, prioritizing TPRM threats can be very time-consuming, and doing it effectively is even more difficult. This is an area where process automation can be extremely beneficial because you have a precise step-by-step process with a formulaic approach that’s very well-suited to this technology. Some process automation includes artificial intelligence and/or machine learning technology, which is very effective in providing an objective and dynamic assessment of a third party’s risk level relative to other risk factors that exist within a mortgage firm’s TPRM landscape. 

Data Visualization for Third-Party Risk Management

Another benefit of automating your mortgage firm’s third-party risk management efforts can be found in data visualization. The best TPRM software platforms include data visualization tools that offer a more digestible, easy-to-understand view of key data points. This can be very beneficial if you are performing threat assessments manually. 

Data visualization tools are also quite useful for companies that are seeking to make more informed, data-driven decisions, particularly in the course of risk management and mitigation strategy development efforts.  It can be challenging to evaluate large volumes of data and data from multiple sources. Data visualization tools such as graphs and charts can go a long way toward making that information easier to absorb and understand. This is critical when it comes to third-party risk management because you want to be sure that you are evaluating a party in a fair, effective way. You also want to ensure that your assessment in terms of threat severity is accurate. A small gap in understanding can have major consequences if you fail to appreciate the seriousness of a specific threat, vulnerability, or risk factor.  

The Right Technology for Effective Third-Party Risk Management for Your Mortgage Firm

Appreciating the risk that third-party vendors and contractors pose is just one piece of the puzzle. You need the right technology to support your risk management and risk mitigation efforts. It’s this approach that will lead to maximum benefit and maximum return on investment (ROI) for your mortgage company. 

At iTech, we specialize in third-party risk management solutions, including platforms that feature automation capabilities. Mortgage firms, along with others in the financial space, have some very unique needs when it comes to risk management and mitigation. Our team has experience working with clients in this industry, providing us with key insights — insights that iTech has leveraged to develop innovative and highly-efficient TPRM automation. Reach out to iTech today if you’re ready to take control of your third-party risk management efforts with process automation and other enterprise software solutions. Let’s begin a dialogue on your mortgage firm’s TPRM challenges and we’ll develop an innovative solution. 

Third-party risk management — or TPRM —  is a very real and very significant component of a mortgage firm’s broader risk management and mitigation strategy. Mortgage firms straddle two industries — the real estate industry and the financial space — and both are highly regulated and highly vulnerable to a broad range of risk factors and vulnerabilities. This makes for a complex risk management equation that can be difficult to handle in an efficient way. There is a solution, though, and it comes in the form of automation.

But this begs the question: How is automation used within the context of third-party risk management? And what are the benefits of leveraging automation technology in conjunction with your mortgage firm’s risk management efforts? 

What is Third-Party Risk Management?

To understand the benefits of third-party risk management automation, it’s important that you have a solid understanding of TPRM and all that it entails. 

Third-party risk management refers to the practice of identifying, managing, and mitigating threats that arise from engagements with external third parties such as vendors, contractors, and subcontractors. In the course of normal business, a mortgage firm may work with dozens of different contractors and vendors. For instance, a mortgage lending company may opt to deploy a new enterprise software platform but in order to do so, they must work with third parties such as the development team, an implementation and deployment team, and a training team that comes in to provide employees with guidance as they learn to use the new technology. Individuals in each of these three roles would have “behind the curtain” access, so to speak, which is what makes third parties so very challenging from a risk management perspective. We’re not talking about a hacker who has to penetrate a mortgage company’s firewalls and other security infrastructure components. Third parties are often given direct (or nearly direct) access to very sensitive systems and data. In a setting such as a mortgage firm, it is not uncommon to have clients’ personal info and their financial information — sensitive data that is highly sought after by the criminal element. A solid third-party risk management strategy is necessary if you’re going to protect your clients and their data. TPRM focuses on screening individuals and even entire companies to determine if they pose a risk to your mortgage firm, your clients, and your interests. And since many third-party relationships extend beyond a single interaction or engagement, a good third-party risk management strategy will include monitoring. This monitoring allows a mortgage firm to determine if a third party’s threat level changes over time. 

How Do You Automate Third-Party Risk Management? 

Automation may not be the first thing that comes to mind when you consider third-party risk management for your mortgage firm.  But you can see significant benefits from TPRM automation. When we refer to automation, it falls within the scope of business process automation or BPA. In the case of BPA, various manual process flows are automated in part or in full. This brings many benefits such as improved accuracy, better speed, and a reduction — or even a complete elimination — of human error. 

In the context of third-party risk management, process automation can be used in a variety of different ways, including the following. 

Background Check Automation

Background checks and reputation checks are important aspects of the TPRM equation. By automating this process, you can rapidly evaluate a third party with unmatched accuracy. It’s even possible to configure your automation to perform periodic re-checks, making it much easier to perform monitoring for third parties with whom you engage on a long-term basis. 

Threat Assessment Automation

The TPRM assessment process is critical for effective risk management and mitigation. During the assessment process, you must consider a variety of factors — including information from a range of sources — as you work to arrive at a threat assessment for a specific individual or business. It’s an arduous task, to say the least, but business process automation can streamline and simplify matters in a dramatic way. A human may spend many hours performing research and collecting information before they can arrive at an accurate threat assessment for that party. But BPA technology can perform the same task in a matter of seconds with an extremely high degree of accuracy. 

TPRM Threat Prioritization

As threats are identified, you must assess those threats to determine how they rank relative to the other risk factors and vulnerabilities that your mortgage firm is currently confronting. With third-party risk management, threat prioritization can be quite challenging because there are so many factors at play. Plus, each of these factors or considerations must be weighted to some degree, adding yet another layer of complexity to the equation. Needless to say, prioritizing TPRM threats can be very time-consuming, and doing it effectively is even more difficult. This is an area where process automation can be extremely beneficial because you have a precise step-by-step process with a formulaic approach that’s very well-suited to this technology. Some process automation includes artificial intelligence and/or machine learning technology, which is very effective in providing an objective and dynamic assessment of a third party’s risk level relative to other risk factors that exist within a mortgage firm’s TPRM landscape. 

Data Visualization for Third-Party Risk Management

Another benefit of automating your mortgage firm’s third-party risk management efforts can be found in data visualization. The best TPRM software platforms include data visualization tools that offer a more digestible, easy-to-understand view of key data points. This can be very beneficial if you are performing threat assessments manually. 

Data visualization tools are also quite useful for companies that are seeking to make more informed, data-driven decisions, particularly in the course of risk management and mitigation strategy development efforts.  It can be challenging to evaluate large volumes of data and data from multiple sources. Data visualization tools such as graphs and charts can go a long way toward making that information easier to absorb and understand. This is critical when it comes to third-party risk management because you want to be sure that you are evaluating a party in a fair, effective way. You also want to ensure that your assessment in terms of threat severity is accurate. A small gap in understanding can have major consequences if you fail to appreciate the seriousness of a specific threat, vulnerability, or risk factor.  

The Right Technology for Effective Third-Party Risk Management for Your Mortgage Firm

Appreciating the risk that third-party vendors and contractors pose is just one piece of the puzzle. You need the right technology to support your risk management and risk mitigation efforts. It’s this approach that will lead to maximum benefit and maximum return on investment (ROI) for your mortgage company. 

At iTech, we specialize in third-party risk management solutions, including platforms that feature automation capabilities. Mortgage firms, along with others in the financial space, have some very unique needs when it comes to risk management and mitigation. Our team has experience working with clients in this industry, providing us with key insights — insights that iTech has leveraged to develop innovative and highly-efficient TPRM automation. Reach out to iTech today if you’re ready to take control of your third-party risk management efforts with process automation and other enterprise software solutions. Let’s begin a dialogue on your mortgage firm’s TPRM challenges and we’ll develop an innovative solution.