Why Most TPRM Programs Fail (and How to Fix Them)

Despite the growing reliance on third party organizations to assist in the delivery of core functions to a business, most third-party risk management programs (TPRM) fail to deliver meaningful protection. SaaS platforms, managed service providers, contractors, cloud providers, and supply-chain partners now sit deeply embedded within enterprise environments. These suppliers bring a variety of positives to a business, but they also introduce a growing and frequently underestimated source of risk. High profile breaches, operational disruptions, and compliance issues can often be traced back to third-party failures rather than internal mistakes. 

Even though companies are introducing more and more third-party groups to their organization, they are struggling to keep pace with the scale and complexity of modern vendor ecosystems, resulting in being exposed to breaches, outages, or compliance failures. This disconnect raises a critical question for business and security leaders alike: 

Why? 

This blog will explore the potential root causes of TPRM failures and provide you with actionable insights that result in the creation of a risk-resilient vendor program that sets your organization up for success and security. 

Understaffed Teams 

Working with limited resources puts a lot of strain on the existing staff of your organization. Resource scarcity is one of the most frequently cited obstacles to effective TPRM. According to GRC Report, nearly 70% of teams report insufficient staffing to effectively manage risk across vendors. With inadequate headcount and outdated tools, teams are falling behind on assessments, remediation tracking, and monitoring. This can result in an increased risk of emerging threats going unnoticed.  

If this is a problem within your organization, we recommend creating documentation or information sheets that help management understand the potential threats as this will increase their likelihood of buy-in. Management that buys in into the program also help with budget for the teams to ensure proper staffing so that risk can be managed.  

Lack of Stakeholder Support 

TPRM requires buy-in from across enterprises, yet many programs lack the support that they need to influence vendor decisions or secure remediation commitments. Instead, program leaders are met with individuals that skirt around security requirements and the risk items raised by the TPRM teams may never be resolved, resulting in widening exposure to risks. Security can often be seen as red-tape that teams do not want to deal with, often because they do not see the value it actually provides to the company. 

If a lack of stakeholder support is persistent within your organization, they won’t allocate budget, teams will be understaffed, and the risk that matters likely won’t be appropriately mitigated. We recommend getting stakeholder buy-in early, and often. This makes the biggest difference out of anything else we could suggest. Make stakeholders feel like they are part of the process so that they understand the importance of TPRM. Facilitate discussions to identify areas of risk to the company and ensure stakeholder buy-in on these. If the risk is not important to the stakeholders, then a leak won’t be seen as a problem. Additionally, keep stakeholders informed regularly so that they see the value in the program as it grows and evolves with the security landscape. 

Misunderstanding What Really Matters 

Many companies have no clear understanding of what’s actually risky to their company because there is a misalignment between risk activities and business context. Therefore, they cover either the wrong things or not enough in their audits. Big risks are missed that threaten revenue, compliance, and trust. Many companies also fall into a pit of treating all vendors the same and deprioritize business-critical risk factors by using generic questionnaires instead of ones designed for each vendor. If you want to learn more about how to avoid treating TPRM as a “one size fits all” concept, check out our previous blog on the topic. 

Many years ago, a colleague shared with me a story from her previous employer who did not invest in security early on. The company saw no point, and were okay if data was leaked (crazy, right?!). Unsurprisingly, there was a massive leak. This resulted in a negative public opinion of the organization, and their reputation was now on the line. Suddenly, they cared about security. This was costly in both a financial and reputational sense, so understanding it earlier will help set teams up for success. 

We suggest developing a risk taxonomy that is tied to known business priorities (this is a great time to involve stakeholders and make them feel like a part of the process. Plus, you get insight on what is most important to them!) in order to make sure that there is an understanding of what the company’s risk threshold is if something were to go wrong. Commonly seen business priorities are contractual obligations, compliance obligations, company reputation, data access levels, critical service impact, and regulatory exposure. If you understand your risk landscape properly, then companies can staff accordingly to help manage the volume of risk. 

Next Steps 

Many TPRM programs are set up for failure due to a fundamental misalignment: risk management activities are not built around their actual business impact. Understaffed teams, lack of stakeholder support, and lack of understanding of risk can practically guarantee that risks remain unmanaged. To be an organization that succeeds when it comes to TPRM, we suggest the following: 

  • Gain stakeholders buy-in early 
  • Treat TPRM as a strategic risk function, not a compliance requirement 
  • Equip teams with staffing needs and stakeholder authority 
  • Connect risk metrics to business outcomes 

By addressing these core problematic areas, organizations can transform TPRM into a core process of their business model that protects them against data breaches, faulty operations, and ensures quality brand reputation. If your organization needs assistance in building out a TPRM program or you aren’t sure where to begin, the team at Start is here to help. Contact us to talk to one of our experts about your TPRM needs. 

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