Governance and oversight are essential for any third-party risk management (TPRM) program. It is crucial to find and monitor important suppliers and their weaknesses. However, even the most organized third-party risk manager can struggle with managing third-party risks without proper oversight.
Without proper program governance, your organization may lack the processes, people, and technologies to manage third-party risk effectively. This compromises your organization’s ability to reduce the risk of data breaches, mitigate operational challenges, and ensure compliance with a myriad of regulatory regimes.
Let’s explore how governance and oversight strengthen your TPRM framework, highlight the role of the NIST Cybersecurity Framework (CSF) 2.0, and outline 10 actionable steps to build a resilient, well-governed TPRM program.
What Is Governance and Oversight in Third-Party Risk Management?
In third-party risk management, governance and oversight involve identifying, establishing, monitoring, and continuously improving the policies and processes that define how an organization manages third-party risk. This typically includes adopting a governance framework, assigning accountability, and embedding risk management practices into broader enterprise functions.
Using the NIST Cybersecurity Framework (CSF) for TPRM Governance and Oversight
Many TPRM programs emphasize cybersecurity as a core risk category. The NIST Cybersecurity Framework (CSF) 2.0 provides a powerful foundation for governance and oversight by introducing the Govern function. This function informs how organizations prioritize and achieve outcomes across the framework’s six functions — Govern, Identify, Protect, Detect, Respond, and Recover — within the context of a broader enterprise risk management strategy.
The Govern function guides oversight of cybersecurity strategy, roles, policies, and supply chain risk management — making it central to robust third-party risk governance.
10 Steps to Building a Well-Governed TPRM Program
1. Establish & Align TPRM Strategy, Objectives, Policies, and Processes
The first element of the Govern Function, GV.SC-01 lays the foundation for your organization’s Third-Party Risk Management (TPRM) program. It focuses on defining core objectives, policies, and processes that align with your information security, risk management, and compliance strategies.
Success starts with stakeholder alignment — ensuring everyone understands and supports the program’s goals and procedures. A strong TPRM program should also streamline the entire third-party risk lifecycle —from sourcing and due diligence to termination and offboarding — in line with your organization’s risk appetite.
2. Define and Communicate Roles and Responsibilities
The second facet of the Govern Function, GV.SC-02 focuses on defining and communicating clear roles within your TPRM program. A RACI matrix can help identify who is responsible, accountable, consulted, and informed at every level. Arguably, the more important piece here is setting clear expectations for vendors, suppliers, partners, and customers.
Each external stakeholder should understand their specific responsibilities — such as timely delivery of assessments, evidence submission, incident reporting, and maintaining strong security controls. Effective communication and accountability help ensure smoother collaboration and stronger overall risk governance.
3. Integrate Cybersecurity Supply Chain Risk into Enterprise Risk Management
Under GV.SC-03, NIST emphasizes embedding TPRM into your broader enterprise risk management (ERM) and information security programs. Treating TPRM as a siloed function can create long-term gaps in oversight.
Integrate third-party risk data — covering cyber, operational, financial, and reputational risk assessments — into your organization’s broader cybersecurity monitoring processes. Align key performance indicators (KPIs) and key risk indicators (KRIs) with organizational objectives to ensure cohesive visibility and more proactive risk mitigation.
4. Know and Prioritize Suppliers by Criticality
GV.SC-04 in the NIST CSF highlights the importance of tiering suppliers based on their criticality to business operations. To do this effectively, you need to quantify the inherent risks across all third parties using factors like:
- Criticality to business performance and operations
- Type of content required to validate controls
- Location(s) and related legal or regulatory considerations
- Level of reliance on fourth parties
- Exposure to operational or client-facing processes
- Interaction with protected data
- Financial status and health
- Reputation
Once risks are quantified, categorize suppliers into tiers. Higher-tier vendors require more thorough assessments, ongoing monitoring, and stronger controls to safeguard your operations and data.
5. Strengthen Cybersecurity Clauses in Vendor Contracts and Agreements
To meet the GV.SC-05 requirement in the NIST CSF framework, you must centralize and automate vendor contract management. From creation and review to renewal and retention, every stage of the contract lifecycle should be standardized and auditable.
The key capabilities to fulfill this requirement include:
- Centralized tracking of all contracts and attributes such as type, key dates, value, reminders, and status – with customized, role-based views
- Workflow capabilities (based on user or contract type) to automate contract management
- Automated reminders and overdue notices to streamline reviews
- Centralized contract discussion and comment tracking
- Contract and document storage with role-based permissions and audit trails of all access
- Version control tracking that supports offline contract and document edits
- Role-based permissions that enable allocation of duties, access to contracts, and read/write/modify access
Including these features in your TPRM program enables you to articulate right-to-audit clauses and establish clear responsibilities in vendor contracts. Then, you can track and manage service level agreements (SLAs) to streamline your governance and oversight of third-party risk management.
6. Conduct Comprehensive Due Diligence Before Onboarding Vendors
Before beginning any formal supplier or third-party relationship, organizations must conduct thorough due diligence. The GV.SC-06 control requires companies to centralize and automate the request for proposals (RFPs) and request for information (RFIs) processes to evaluate vendors consistently and efficiently.
A strong central automated solution should enable you to compare RFIs and RFPs on key attributes — such as technologies used, ESG scores, financial stability, breach history, and reputation — to create detailed vendor risk profiles. This allows for informed selection decisions and reduces remaining risk before formal engagement begins.
7. Identify, Record, Prioritize, Assess, Respond to, and Monitor Risks Posed by a Supplier Throughout the Relationship
Under GV.SC-07, the NIST CSF calls for continuous identification, assessment, and monitoring of supplier risks. A strong TPRM program does this by combining automation, visibility, and intelligence.
Automate Risk Assessments
Use a centralized TPRM platform with a library of pre-built risk assessment templates. Conduct assessments at key stages:
- Onboarding new vendors
- Contract renewals
- Regular intervals (quarterly, annually, or as needed)
- Adjust frequency based on material changes or emerging risk events
Increase Visibility and Accountability
A central management system automates workflows, task assignments, and evidence reviews. This ensures your team:
- Has real-time visibility into vendor risks
- Receives automated remediation guidance
- Collects verified evidence for auditors
Track External Threats
Monitoring shouldn’t stop at internal assessments. Strengthen oversight by tracking:
- Cyber threats and vulnerabilities across the Internet and dark web
- Reputational, sanctions, and financial risk data from public and private sources
Correlate and Centralize Data
Combine all insights into a unified risk register to streamline reporting, remediation, and response. Incorporate operational and financial data for context and trend analysis over time.
By unifying your data and automating assessments, you create a continuous feedback loop that enhances visibility, speeds response times, and reduces overall third-party risk.
8. Include Third Parties in Incident Response and Recovery
As part of your broader incident management strategy, you should be able to identify quickly, respond to, report on, and mitigate the impact of vendor security incidents. This capability is central to the GV.SC-08 control.
While an internal team can manage this process, many organizations lack the specialized expertise and bandwidth needed for effective third-party incident response. In these cases, partnering with a managed service provider can be highly effective.
A managed service brings dedicated experts who can:
- Centrally manage vendor communications and coordination
- Conduct proactive event risk assessments
- Score and correlate risks with continuous cyber monitoring intelligence
- Provide targeted remediation guidance
These services significantly reduce the time to identify and contain vendor-related incidents and ensure timely remediation across your supply chain. An effective third-party incident response service should include:
- Continuously updated, customizable event and incident questionnaires
- Real-time progress tracking for response completion
- Clearly defined risk owners with automated reminders
- Proactive vendor reporting and alerts
- Consolidated dashboards showing risk ratings, scores, and flagged responses
- Automated workflow playbooks triggered by incident severity
- Built-in reporting templates for internal and external stakeholders
- Integrated remediation recommendations to reduce risk
- Data and relationship mapping to visualize connections across third, fourth, and Nth parties
Strengthen Insight with Historical Breach Intelligence
Enhance your visibility by leveraging databases that track historical breach data across thousands of organizations, detailing the types of stolen data, compliance issues, and real-time breach notifications. This intelligence provides valuable context for each vendor’s susceptibility to incidents.
Armed with these insights, your team can more accurately assess the scope and impact of each incident — understanding which data was involved, how vendor operations were affected, and verifying that all remediations are complete.
9. Monitor Supplier Performance and Compliance Continuously Throughout Relationship Lifecycle
Tackling the GV.SC-09 facet of the Govern function requires a strong performance management focus. Evaluate whether vendors are meeting service-level agreements (SLAs), applying recommended remediations, and adhering to necessary compliance mandates through continuous monitoring and assessment.
Define and monitor KRIs and KPIs to measure supplier performance against established benchmarks. Using a centralized TPRM platform makes it easier to visualize trends, identify gaps, and showcase improvements — supporting both operational excellence and regulatory compliance.
10. Manage Offboarding and Post-Contract Risk
The final element, GV.SC-10 recommends that organizations effectively manage vendor offboarding and post-contract risk exposure.
Automate Offboarding Procedures
Implement workflows to:
- Review contracts and confirm all obligations are met
- Verify data destruction and system access removal
- Track compliance, payments, and certifications
Maintain Documentation and Continuity
Store all NDAs, SLAs, and contracts in a secure, centralized system with AI-driven document analysis to validate compliance and criteria.
Support Business Continuity
A critical component of this step is to ensure business continuity during the transition period between the terminated agreement and the onboarding of a new supplier.
The Bottom Line: Governance and Oversight Drive TPRM Success
Governance and oversight are the compass guiding your TPRM journey. Without agreement on processes and key metrics, you’re unlikely to achieve your risk reduction goals. As the Cheshire Cat said in Alice in Wonderland, “If you don’t know where you’re going, any road will take you there.”
With clear governance, you’ll always know your destination — and the right road to get there. Using the NIST CSF 2.0 Govern function will provide a solid foundation for building governance into your third-party risk management program.
Ready to Tackle TPRM Governance?
See how Mitratech can help you automate governance, streamline oversight, and mature your third-party risk management program. Request a personalized demonstration today.
Editor’s Note: This post was originally published on Prevalent.net. In October 2024, Mitratech acquired the AI-enabled third-party risk management, Prevalent. The content has since been updated to include information aligned with our product offerings, regulatory changes, and compliance.
