Importance of Effective Third-Party Risk Management for the Financial Services Industry

Introduction

Discover why managing third-party risks is crucial for financial services firms and how it can protect your organization from significant threats.

1. The Importance of TPRM

TPRM has become more crucial now than ever. Failing to monitor and control risks across the third-party engagement lifecycle can lead to security or compliance gaps.

2. Major Third-Party  Risks

Cyber and Privacy Risk Compliance & Regulatory Risk: Digital Risk

3. Importance of    Robust TPRM

Effective TPRM programs are essential to manage risks throughout the third-party lifecycle, preventing security and compliance gaps.

4. Best Practices for TPRM

- Risk-based segmentation with  suitable controls to address risk. - Assess regulatory compliance based  on third-party activities. - Capture, track, and report compliance  and performance metrics. - Independent, cross-functional teams  for oversight and decision-making. - Comprehensive risk management  tools with clear ownership across  business units.

5. Valorant’s 5-Step TPRM Process

- Board and C-Suite engagement.    Maintain an updated third-party  inventory. - Adopt risk models aligned with the   organization’s risk appetite. - Define roles and responsibilities clearly. - Risk management activities across the  third-party lifecycle.

6. Adapting to Technological Changes

Stay proactive in managing third-party risks by continuously adapting to technological advancements and regulatory changes.

Conclusion

Proactive third-party risk management ensures financial firms remain secure, compliant, and resilient, safeguarding their operations and reputation.