Third-Party Risk Management in the Procurement Process
The long-term nature of the procurement process means there is greater complexity in the factors to consider when making procurement decisions. The activation of procurement agreements means entering into business relationships governed by legal documentation and contracts, so meticulous due diligence is vital.
Procurement processes look considerably different than they did two years ago. Every new business relationship now requires third-party risk management (TPRM) processes because risk management has taken on new complexities. Consider how your procurement processes will look in the future to ensure your risk management strategies continue to provide adequate protection.
Third-Party Risk in the Procurement Process
The need for goods or services could be influenced by economic uncertainty or entirely dictated by it. Risk profiles of third-party suppliers have likely changed in recent years due to the pandemic and other global developments. The terms you will be negotiating with suppliers will now need to reflect the potential circumstances that could arise, including amendments to force majeure clauses. Purchase orders are likely to look quite different as well.
Navigating Risk
The risk landscape has changed, so your approach to third party risk management must change as well. Reassess your business risk profile and adapt third-party risk management strategies accordingly. Use a fluid proactive approach to implementing new or updated policies to address new challenges while conducting business during economic uncertainty by:
- Renewing risk profiles
- Re-examining current risk assessments for active contracts
- Re-shaping overall third party risk management policies
- Communicating all changes to the rest of the organization
Third-party risk management software provides risk mitigation tools with a high degree of automation. A secure, centralized, cloud-based digital platform enables you to work smarter, not harder. Gain more efficiencies and reduce risk without increasing the demand on company resources.
TPRM Research
The research element of third-party risk management can consume a lot of resources. Global economic uncertainty could trigger the re-evaluation of risk assessments concerning the most well-established, long-running business relationships. TPRM software facilitates the mitigation of risk through connective research tools and configurable reporting features.
Investigative TPRM Tools
Third-party risk management software can connect with external databases such as LexisNexis and Dun & Bradstreet to enable the compilation of thorough risk profiles of both businesses and individuals. These investigative tools identify, authenticate, and monitor businesses and individuals to mitigate risk posed by criminal activity, corruption, sanctions, false identities, and non-compliance of regulatory requirements. The integration of these tools with your TPRM software allows you to monitor records of commercial identities of vendors, suppliers, customers, and employees. Bolster your ability to prevent fraud and keep costs contained with investigative that automate incident management inside your TPRM software.
Auditable Data
Data analysis and record-keeping are made considerably easier with centralized, configurable third-party risk management software. While only authorized users have access to the platform, every action is logged, tracked, and remains fully auditable. The updated standards and regulations of your business are enforceable throughout the system, which increases the accuracy of third-party due diligence. This enables senior managers to increase the speed of decision making and shorten project timeframes. These elements of TPRM are achieved through a digital workflow engine and automated audit trails.
