Integrated Risk Management Requires Robust Vendor Risk Management
Some organizations are shifting their risk management priorities from Governance, Risk, and Compliance (GRC) to integrated risk management (IRM). The focus on IRM stems from the increasingly digital business world and a recognition that an enterprise’s interconnected business units are affected by new technologies.
Many organizations struggle to keep pace with the proliferation of Big Data and the Internet of Things (IoT). One area of concern is how digital transformation of third-party partnerships exposes an enterprise to unique and unprecedented risks.
Vendor relationships involve sharing sensitive information. What can you do when faced with oversight concerns, the risk of cybersecurity breaches, reputational risk, and compliance mandates? Implement a holistic IRM approach by ensuring your organization has a powerful vendor risk management (VRM) program.
Technology’s effect on key risk areas
Gartner defines IRM as “a set of practices and processes supported by a risk-aware culture and enabling technologies that improves decision-making and performance through an integrated view of how well an organization manages its unique set of risks.” The analyst firm argued in 2017 for the necessity of the new concept, saying “IRM goes beyond the traditional, compliance-driven GRC technology solutions to provide actionable insights that are aligned with business strategies, not just regulatory mandates.”
Technology is the differentiator between IRM and GRC. IRM focuses on making risk-based decisions that consider technology’s effect on business unit critical processes, including:
- Identity Risk Management (IdRM)
- Corporate Compliance Management
- IT Risk Management
IRM considers how each of your lines of business interact with each other and how they are affected by a company’s vendors. VRM is a key risk focus for IRM because vendors introduce enterprise-wide regulatory, data protection, and viability risk.
How does vendor risk affect other critical processes? What is your vendors’ impact on a BCP/DR plan or corporate compliance management? These are important questions to consider when formulating a VRM program that contributes to IRM requirements.
Cut across organizational silos
VRM systems can provide an effective solution for organized and efficient vendor management. User-friendly VRM software and services provide features and tools for risk assessments, monitoring, and rating. You gain capabilities that help to manage and mitigate third-party risk across the entire enterprise.
Your organization will be able to perform reviews of vendor BCP/PR management, financial performance, control audit, information security, and more. You can ensure compliance, reduce risk, and improve the productivity of a VRM program. Most importantly, you gain a singular perspective of the inherent and residual risk exposure from vendors to various levels of the organizational hierarchy.
Utilize a VRM solution that cuts across departmental silos with a multi-dimensional approach to VRM. So you’ll strengthen your unified IRM system by leveraging a structured VRM program.
An IRM approach helps nurture critical awareness and develop risk management maturity. Obtaining a comprehensive view of all business units and risk and compliance functions will enable you to strengthen key risk management areas — including VRM.