Build resilience by mitigating extended ecosystem risks
Article by Michel Feijen, Managing Director, APAC, MetricStream
The modern enterprise is increasingly reliant on interconnected networks. From suppliers to software and resourcing needs, we are firmly in the age of businesses leveraging their networks to garner organizational value and competitive advantage through third-party vendors.
While the use of third-party vendors has enabled many firms to go as far as to outsource core functions and derive efficiencies and savings, it has also increased exposure to high-profile risks to an unprecedented level. The pandemic has further compounded this, and companies are fully aware that appropriate oversight of third parties is imperative as their business systems become more complex.
While companies could retract from their heavy reliance on third parties, the fact is, there is no viable way for most businesses to undo their reliance. Extended networks have asserted their place as a crucial element in driving business strategies and value creation.
How do you solve a problem like extended ecosystem risk?
When it comes to third-party onboarding, agility and automation are essential. For businesses in Malaysia and Singapore, the need for speed without compromising on the vetting process before contracting any entity is akin to a golden ticket. Technologies like artificial intelligence (AI), machine learning (ML), and natural language processing (NLP) empower businesses to be nimble when screening, evaluating, and monitoring vendors on an ongoing basis. But these alone will not be enough, and businesses must avail themselves with an approach to third-party risk management (TPRM) that is connected, integrated, and proactive.
Further to the point, an effective and efficient TPRM program recognizes that all risks are interconnected; from third- and even fourth-party risks, to environmental, social, and governance (ESG) and governance, risk management and compliance (GRC) – these challenges must all be tackled simultaneously in today’s competitive landscape.
Take, for example, the rise in demand for sustainable investments and sustainable assets in Malaysia and Singapore. The ramifications on firms’ reputations due to a third-party vendor with a poor ESG posture would be significant. With the purpose of an organization now just as important as its profit margins, ensuring that third parties help advance business goals has become a vital element to sustained growth. As a result, encouraging companies to take action to protect human rights and reduce environmental impacts in their supply chains can no longer be placed purely under the remit of ethics and compliance. Incorporating ESG into your third-party risk management assessments also reduces the risk of regulatory actions and fines. Therefore, it is crucial that risk management covers all aspects to ensure businesses are not blind-sided by flaws in their extended business ecosystem.
Drive efficiency via automated segmentation
Businesses know that their vendors meet a variety of their needs, and these services vary in terms of their importance to the enterprise. The key here lies in repeatability. Consistency is the mother of efficiency, after all, and businesses need automated segmentation that is consistent and thoroughly lays out the inherent risks and criticality of each vendor across the extended ecosystem.
As a result, businesses gain the ability to delineate vendors based on risk, which is essential to effective due diligence. With streamlined segmentation at the time of the onboarding process, organizations can leverage consistent deployment of rules for continuous due diligence that helps to carve out a path for ongoing risk monitoring and management throughout the TPRM lifecycle.
Insulate against risks and meet evolving needs
Harnessing a collaborative approach enables organizations to step into the future by identifying, assessing, managing, and mitigating risks across the entirety of the business. Firms will step up data visibility and at the same time enhance their security posture. This increases the time and cost savings and reduces redundant work – crucially driving customers’ trust.
Businesses in Singapore and Malaysia are at a crossroads where they must respond to an ever-evolving risk landscape swiftly or get left in the dust by competitors. Solutions that offer agility and broad oversight help businesses understand and manage risks in their extended ecosystems. Businesses must ensure that risk is managed across procurement and the supply chain ecosystem by leveraging platforms designed to meet the evolving needs of the corporate world.
With the power of connected, integrated, and proactive AI-enabled platforms, organizations can navigate a safe passage into the future by arming themselves with actionable and intelligent insights. This in turn empowers businesses with the confidence to make decisions accurately and swiftly. Through AI, integrated assessments, and segmentation, the modern enterprise gains invaluable assurance over its vendor population. Organizations, crucially, consolidate all endpoints via a common, uniform framework that positions them to fend off the pitfalls of risks in their extended ecosystems.
The views in this article is that of the author and may not reflect the views of Tech Wire Asia
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