Vendor Risk Management: APAC’s growth creates potential for risk management solutions
Businesses across a variety of industries and of varying sizes are constantly exposed to risk. In today’s volatile business environment, preparation is vital for survival. For businesses, understanding and controlling this risk is the key factor to maintaining a stable and efficient organization.
But managing risk first begins with understanding what constitutes as a risk. Threats – or risks – stem from a wide range of sources. For instance, the terms can refer to financial threats, IT security threats and data-related risks, as well as employee risk (both to and from employees).
When not managed correctly, these risks have detrimental impacts on any unprepared organization.
Taking the Equifax data breach as an example, in which the personal data of 143 million customers was accessed by hackers, we can see how risk management may have helped prevent the disastrous data (and PR) loss.
One of the biggest mistakes the company made was not having a means of recognizing its errors both before & after the fact, and not making attempts to mitigate before it gained the notoriety it did.
In the wake of the data breach announcement, shares of Equifax fell by 13.2 percent, and according to CNBC, “it may cost the company hundreds of millions of dollars and hurt its reputation for years to come.”
There are several lessons companies can learn from such attacks.
- You must prepare for risks and be able to react quickly.
- You must have the ability to respond and recover promptly.
- You must be transparent with your customers, investors, and other stakeholders, and reassure them you have the situation controlled.
The unpredictable, evolving threat landscape has led to some changes in information privacy laws which aim to protect data and prevent Equifax-like situations from occurring.
GDPR aims to overhaul how organizations store, access, and process consumers’ sensitive digital assets, thus simultaneously protecting their rights to privacy and personal data protection.
The regulation increases the enterprises’ responsibilities, with extreme penalties for companies that are non-compliant. Tightening regulations concerning data privacy aims to bridge the gap between commitment to, and execution of, risk management.
Frequently, businesses spend heavily to repair damage in the aftermath of a data breach and yet, show a lack of proactiveness in risk management activities to help prevent such events occurring.
In effect, tightened regulations increase pressure on enterprises to bolster their security infrastructure and prepare for risks.
The Vendor Risk Management (VRM) market is set to experience significant growth Q3/4 this year, specifically, VRM concerning third- and fourth-party vendors with whom a business partners. According to online market research company ReportsnReports, the VRM market is forecast to reach value of US$6.5 billion by 2022, from US$3.29 billion in 2017.
The common elements of a solid VRM strategy include:
- Assessing risk and prioritizing response based on how critical the vendor is to the business.
- The management of contracts for all vendors, enabling better stakeholder involvement and central storage for easy reference.
- Rating vendors on their cybersecurity practices and ensuring the cybersecurity evaluation is current.
There are now a range of VRM solutions that aims to make the risk management of vendors smooth and efficient.
Leading research and advisory company, Gartner, outlines a good VRM solution as including the following capabilities and tools:
- Risk assessment process and workflow presentation.
- Contract management.
- Control assessment and monitoring.
- Exception management.
- Access and user controls.
- Remediation management.
- Third-party content delivery.
- Vendor performance & profile management.
With an expected CAGR of 14.6 percent during the period 2017-22, growth is driven by:
- An increasing trend of outsourcing various business operations and the risk assessment of vendors.
- A growing need to manage the complex third-party ecosystem.
- Changing regulations across different geographies.
According to the report, while North America is estimated to hold the largest market share, the APAC region is expected to grow at the highest CAGR. The region is seen as an area of interest for VRM due to untapped opportunities and increasing commercial investment in the wide variety of industry verticals in the area.
Through the use of a good VRM solution, your business can prepare for and mitigate risk, particularly relating to vendors. With the ability to track and measure vendor performance, your company can receive timely alerts about problems, taking relevant action to correct them before they harm your bottom line.
Here are two VRM solutions that provide ample support to firms when assessing, evaluating, and analyzing risks associated with vendors.
This leading industry standards and compliance company offers an integrated risk management solution that combines world-class tech platforms, services, and advisory capabilities across the entire business lifecycle.
Through one powerful platform, your business can develop a holistic, integrated view of risk.
It can help you better manage your digital risk ecosystem by streamlining the once time-consuming and error-prone process of assessing vendors through email and spreadsheets. As a result, you’ll improve consistency and efficiency, and significantly reduce business costs.
The company’s cloud-based Digital Risk solution provides the ultimate protection for your business, by automating due diligence, on-boarding, risk assessments, and integrations with vendor rating services.
It maps requirements to the Standard Information Gathering Agreement (SIG) and helps access all your vendor data through a risk-intelligence tool to provide complete vendor lifecycle management.
The award-winning solution allows you to manage thousands of vendors, view the overall risk ranking, and continuously monitor changing situations.
This reduces the risk that your business will become another victim of compliance violation as a result of irresponsible vendors.
SAI Global’s solution enables access to a comprehensive knowledge base of over 1,000 legal and standard frameworks, including over 400 pre-built surveys with built-in logic.
From this powerful resource, your business can prioritize and support decision-making through quantitative and qualitative reports on identified risk indicators.
The solution is completely flexible, based on a secure architecture, and can be delivered as either a SaaS or an on-premise solution.
Through partnerships with companies such as Thomson Reuters and SecurityScorecard – known for their strategic expertise and excellent service in VRM – this solution is a must-have for any smart business.
IBM’s OpenPages VRM brings true transparency into operational and security activities for vendors and the subcontractors they hire. With this solution, your business can gain a clear understanding of how each individual vendor relates to your business processes.
Organizing and centralizing information relating to your vendors into a configurable and customizable platform, this solution is the key to streamlining your risk management processes.
An improved vendor management solution
Creates, maintains and stores all vendors and engagements on the system. Through this information, the vendors are classified as either low, medium, or high in criticality. Furthermore, the solution streamlines the management of contracts with third-party vendors.
Identifies and mitigates risks
This feature understands how third-party engagements support your business. Using a standard risk assessment, it identifies and mitigates risks specifically for individual vendors.
The delivery of compliance assessments
With the use of a powerful questionnaire assessment capability, the solution can conduct vendor or engagement tiering through the analyses of information gathered via risk or compliance questionnaire assessments.
Enables ongoing risk assessments
Effective VRM is an ongoing process. IBM’s OpenPages solution builds key performance & risk indicators, allowing for the ongoing monitoring and reporting of risks. With complete transparency and access to a comprehensive risk profile, you can improve decision making and avoid penalties that are often associated with vulnerabilities and vendor systems.
*Some of the companies featured in this article are commercial partners of Tech Wire Asia