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No business can do everything alone. Due to this, it's normal for you to need multiple vendors to keep your operations running. Some are easy to replace, whereas others are less so. As a result, you're often recommended to set up a third-party vendor risk automation system so your operations won't come to a screeching halt if one of your critical vendors goes down. However, you should know that this might not be enough. Just as you depend on your critical vendors, they have similar relationships with other goods and service providers. This is why third-party vendor risk automation software now often helps with this so-called fourth-party risk.
Why Should You Care About Fourth-Party Risks?
Third-party risk matters because you'll take a hit if one of your critical vendors takes a hit. For instance, you can secure your systems but still suffer a cybersecurity breach through third-party access. Indeed, 51 percent of organizations experienced such incidents over 12 months. Unfortunately, this chain of dependencies doesn't end with you and your critical vendors because you aren't the only business that needs others to run your operations. That means you can't bring your third-party risks under control until you understand the fourth-party risks that can disrupt your critical vendors.
How Can Your GRC Management Program Expand to Handle Fourth-Party Risks?
Managing fourth-party risks isn't a massive conceptual leap from managing third-party risks. If your GRC management program already deals with third-party risks, you should have a solid foundation for expanding your capabilities. After all, much of managing fourth-party risks consists of two things. First, you need to learn your critical vendors' critical vendors so you can study them. Second, you must ensure your critical vendors have sound third-party vendor risk management. Be warned that this can be much easier said than done. You'll find it easiest to learn this information when you have good working relationships with everyone. Moreover, periodically check your critical vendors' practices because you can't just assume they'll stay the same forever.
Does Third-Party Vendor Risk Automation Software Have a Role in Handling Fourth-Party Risks?
As mentioned earlier, third-party vendor risk automation software is often capable of helping with fourth-party risks. Supply chains have become more complicated, thus forcing businesses to guard against more potential threats than ever before. Thankfully, software companies have scrambled to meet this need. Besides this, risk automation makes the processes you use to protect your business more efficient. This matters because GRC management programs don't have infinite resources. The easier it is for your business to manage third-party risks, the more time and energy you can shift to managing risks further along the supply chain. Being aware of fourth-party risks can do much to prevent your business from being blindsided by these possibilities.
Reach out to a local service, such as Onspring Technologies, to learn more.
Share28 August 2023
