Much of business success depends on successfully managing risk, but that includes not only those aspects under direct control, but also the risks in relationships with third parties. It’s a task that can be daunting for any business and Luke Nordlie joins host Eric Hanselman to discuss the challenges and technology-based approaches to risk assessment, monitoring and compliance. With expanding supplier ecosystems, businesses are faced with issues of scaling their third party risk management efforts to match that growth. At the same time, there is growing regulatory pressure and associated compliance mandates. For many businesses, this comes at a time when they’re working with fewer staff, as they try to manage costs. To become more efficient and effective, they need to shift their tactics from point-in-time evaluations to a continuous compliance process, leveraging data to build better understanding of their risk posture. It’s an approach that has seen use in cybersecurity and insurance. 

With increasing desire to outsource non-core business functions comes a growing supplier inventory. Better controls are needed for onboarding new suppliers to help understand inherent risk. But as industries rely on common providers for specific capabilities, concentration risk increases across them. Regulators are focusing on resilience, with regulations like the UK’s DORA explicitly requiring assessments of third party risk. There is additional pressure placed in areas like FinTech, where changes in the funding landscape are translating into needs for greater resilience. Performing due diligence in these new conditions is putting focus on technologies like questionnaire-less onboarding and monitoring using different data sources. Efforts at regulatory harmonization show promise in aiding third party risk management and helping it become a continuous process of evaluation and understanding of risk posture.

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Credits:

• Host/Author: Eric Hanselman
• Guests: Luke Nordlie
• Producer/Editor: Donovan Menard, Odesha Chan
• Published With Assistance From: Sophie Carr, Feranmi Adeoshun, Kyra Smith