We all know that a business can’t operate in a vacuum. You have to collaborate with vendors, clients, suppliers, specialists, and plenty of other third-party partners. As a natural result, these organizations provide critical services and have access to data about your company and your customers. You need to manage the exposure risk that those third parties carry.
This is where continuous third party monitoring comes in. In the body that makes up your third party risk management program, continuous monitoring is the eyes and ears—constantly evaluating critical information to help you make wise decisions.
What is Continuous Third-Party Monitoring?
Continuous third-party monitoring is exactly what it sounds like. You identify key risks you need to monitor and manage with your third parties and track them continuously—often in real time. Continuous monitoring gives you visibility into the ongoing risk posture of your third parties, allowing you to identify risks and vulnerabilities as soon as they happen—sometimes even earlier. Some of the risks that are natural to include in a continuous monitoring program include:
· Operational integrity
· Data security operations
· Data security environment
· Fourth parties
It’s important to keep in mind that continuous third-party monitoring is not a replacement point-in-time due diligence. Rather, it’s complementary. It’s always important to do a deep dive with your third-parties using a due diligence questionnaire before you enter into a contract, and on a periodic basis thereafter based on the inherent risk they present. High risk third parties are typically assessed annually, while moderate and lower risk less frequently.
Continuous Monitoring Benefits and Goals
A well-designed continuous monitoring program provides a close to real-time picture of the risk posture of your key third parties. It allows you to move from reactive (months an event occurs) to proactive (days or weeks). Continuous monitoring also allows you to see trends that can help you predict when something bad may happen before it happens.
Market surveys of companies that use continuous third-party monitoring show that those companies report improvements in risk management due to their ability to:
· See trends in financial health
· Be alerted to negative news or litigation as it is happening
· Reduce the amount of time required for security event identification.
· Compare security postures.
· Screen vendors more effectively based on real-time risk.
· Prioritize remediation activities.
5 Key Questions to Help Shape Your Third-Party Continuous Monitoring Program
When you think about implementing a third-party continuous monitoring program, it’s important to be clear on your focus and start with your end goals in mind. And always take a risk-based approach to building out your program. Since every company’s risk appetite is different, you need to define which vendors and risks meet the requirements for continuous monitoring. Here are five key questions you’ll need to answer to start shaping out your program.
1. Which categories of vendors (and other third / fourth parties) require monitoring and why?
2. What are the key risks you need to manage for each of those categories of vendors?
3. What type of monitoring data will be most helpful to you in managing those risks?
4. What third-party monitoring software is best equipped to provide you this data?
5. How in your company is going to be responsible for reviewing the results?
6. What are you going to do when you identify an actual problem with a key vendor?
Integrating a third-party continuous monitoring program into your existing TPRM program is critical to managing risks in world where those risks can change daily. If you need help establishing your program, Vendor Centric can help. Contact us today to get a free, tailored initial consultation.