Restructuring Third-Party Risk Management: Meeting Challenges with a Holistic Approach
The breadth of third-party risk management strategies and programs are undergoing a seismic shift within organizations. Over the past several months, I’ve observed a dramatic uptick in the number of organizations issuing requests for proposals (RFPs) for third-party risk management solutions and asking my advice on what solutions, services, and intelligence they should consider in these. This surge reflects a growing awareness of the need to rethink and restructure how businesses govern their extended enterprise. There are several RFPs that I have interacted on where I have flat out stated they need to look at different solutions as they ones they are down to will not deliver on the breadth and complexity of the program they are trying to achieve.
Driving this urgency is a wave of regulatory developments that are reshaping the expectations placed on organizations. The EU Corporate Sustainability Due Diligence Directive (CSDDD) looms large, demanding that companies actively manage sustainability risks across their supply chains. Meanwhile, the EU’s progress yesterday toward a Forced Labor Ban adds another layer of complexity, requiring businesses to ensure that forced labor has no place in their operations or those of their suppliers. These, and others, illustrate the demand for Environmental, Social, and Governance (ESG) assurance that is pressuring companies to provide transparency and accountability across their third-party relationships.
These dynamics have pushed organizations to move beyond siloed and reactive approaches to third-party risk management. Instead, they are embracing more integrated, holistic processes that can deliver greater transparency, agility, and resilience.
The Persistent Challenges of Third-Party Risk Management
Organizations are grappling with significant challenges in third-party risk management. These challenges are often rooted in scattered, siloed, outdated, and too often manual processes (or scattered solutions) that can no longer keep pace with today’s complex and fast-moving third-party risk environment.
One of the most pervasive issues is the fragmentation of data and processes. Many organizations still operate in silos, with different departments managing third-party risk independently. This makes it nearly impossible to achieve a unified view of third-party risks and creates redundancies that waste time and resources, and fail to deliver on holistic reporting that is required from things like EU DORA, EU CSRD / EU CSDDD, and more.
Adding to the complexity is the lack of real-time information. When data is scattered across disconnected systems, organizations are unable to identify and respond to emerging risks quickly. This problem is compounded by the difficulty of scaling traditional third-party risk management processes to accommodate growing ecosystems of suppliers, vendors, and partners.
Without integrated systems, even basic tasks like performance evaluations or compliance tracking become cumbersome. Audits and inspections, which are critical for maintaining accountability, often suffer from insufficient documentation and poor visibility into third-party activities. These gaps leave organizations vulnerable to both operational disruptions and regulatory penalties.
The Need for Modern Third-Party GRC Solutions
To meet these evolving demands, organizations are increasingly turning to modern Third-Party GRC (Governance, Risk, and Compliance) solutions. Modern Third-Party GRC platforms are designed to overcome these obstacles by providing a comprehensive, integrated approach to third-party risk management. These platforms do more than just automate the management of third-party relationships; they enable organizations to proactively govern and monitor risks across the lifecycle of their third-party engagements.
What makes these solutions so powerful is their ability to provide real-time insights into third-party performance, risk, and compliance. By integrating data from multiple sources and delivering it in a unified view, these platforms empower organizations to move away from reactive, fragmented processes and toward proactive, strategic decision-making.
For example, onboarding new third parties becomes faster and more thorough, with automated due diligence processes that ensure each supplier or partner meets regulatory and contractual standards. Ongoing monitoring ensures that risks are continuously evaluated, while regular audits and inspections verify that third parties remain compliant throughout the relationship. Even the process of offboarding—a phase often overlooked—becomes more structured, reducing the risk of data breaches or unresolved compliance issues when a relationship ends.
By providing these capabilities, Third-Party GRC solutions not only streamline operations but also ensure alignment with broader organizational objectives, such as sustainability, ethical sourcing, and resilience.
At the core of these solutions is the ability to unify data and processes across the organization. By breaking down silos, these platforms create a single source of truth for third-party risks, performance, and compliance. This integration not only improves efficiency but also enables more strategic decision-making.
Another key strength of these solutions is their real-time monitoring capabilities. Whether it’s tracking key performance indicators (KPIs) or conducting periodic risk assessments, organizations gain the ability to continuously evaluate their third-party relationships. This ensures that risks are identified and addressed before they escalate into major issues.
Automation is another critical feature. By automating routine tasks like due diligence and compliance tracking, these platforms reduce the burden on internal teams and free up resources for more strategic activities. For example, automated due diligence processes can flag potential red flags, such as connections to politically exposed persons or adverse media coverage, while ensuring that all third-party interactions are thoroughly documented.
The NEED for Integration of Third-Party Risk Intelligence
What sets today’s leading Third-Party GRC solutions apart is their integration with third-party risk intelligence services. These integrations allow organizations to tap into a wealth of external data that enhances their ability to assess and manage risks.
For instance, platforms can provide real-time updates on watch lists, sanctions, and negative news, enabling organizations to respond swiftly to potential threats. They can also deliver insights into security and financial viability ratings, helping companies make informed decisions about their third-party engagements. And as ESG becomes a critical area of focus, many platforms now offer detailed ESG ratings and compliance data, ensuring that third-party relationships align with organizational values and regulatory requirements.
Preparing for the Future: The Business Case for Third-Party GRC
Investing in a Third-Party GRC solution delivers tangible benefits that extend beyond compliance. These platforms drive efficiency by automating manual processes and reducing redundancies. They enhance effectiveness by providing a comprehensive view of third-party risks and ensuring accountability at every stage of the relationship.
Moreover, Third-Party GRC solutions strengthen organizational resilience by enabling proactive risk management. By identifying and addressing risks early, companies can avoid costly disruptions and maintain business continuity. Finally, these solutions provide the agility needed to adapt to an ever-changing regulatory environment, ensuring that organizations remain compliant even as new challenges emerge.
The regulatory landscape is only becoming more complex, and the risks associated with third-party relationships are growing in both scale and scope. The introduction of measures like the EU CSDDD and the Forced Labor Ban is a clear signal that organizations can no longer afford to take a reactive approach to third-party risk management.
By adopting modern Third-Party GRC solutions, businesses can position themselves to navigate these challenges with confidence. These platforms provide the tools needed to not only meet regulatory requirements but also build stronger, more resilient third-party ecosystems.
As organizations restructure their approaches to third-party risk management, the emphasis must be on creating processes that are not only efficient and effective but also aligned with their broader values and goals. In doing so, they can turn third-party risk management from a compliance burden into a strategic advantage.