Each industry has its unique challenges and requirements when it comes to third-party relationship management. These third-party risks are continuously increasing and it is estimated that the data breaches will surpass $5 trillion by 2024. Businesses worldwide are in dire need of robust and custom TPRM strategies by industry. Custom TPRM (Third-Party Risk Management) strategies by industry are tailor-made approaches and measures to address issues with third-party relationships. Implementing custom TPRM strategies by industry not only helps businesses prevent data breaches but also protects them from emerging threats.
This article includes industry-centric TPRM approaches, their significance, and suggestions from data compliance expert captain compliance.
Key Takeaways
- Compliance requirements are wide in range and complex within certain industries.
- Customization of risk assessment models is essential for businesses to tackle challenges and risks more efficiently.
- Collaborating with industry peers allows businesses to strengthen risk management practices, reduce vulnerabilities, and protect critical assets from potential threats.
Industry-Specific Risk Landscape
Industry-specific risk landscapes are quite different from the general risk landscapes. Each industry has unique challenges and requirements that other industries never experience. Being an industry-specific business not only helps tackle challenges and requirements effectively but also helps improve overall performance.
Identifying Unique Risks in Different Sectors
When beginning the risk management process, identifying risks can be challenging and overwhelming for most businesses. Every industry has unique risks and challenges that must be identified and addressed timely with a high level of analysis. Businesses must understand the industry-specific risk landscape to mitigate risk effectively and meet compliance requirements. Let’s have an overview of key risks by industry and understand sector-specific compliance requirements.
Overview of Key Risks by Industry
Key risks can vary from industry to industry, but some of the most common industry-specific risks are the following
- Finance Industry: Compliance risks, and data security risks.
- Healthcare Industry: Regulatory compliance and data breaches.
- Technology Industry: Service disruptions, and intellectual property infringement.
- Retail and e-commerce Industry: Supply chain risks, and payment process security.
- Manufacturing Industry: Quality control issues, and ethical concerns
- Energy Industry: Regulatory compliance, environment risks, and safety risks
Understanding Sector-Specific Compliance Requirements
Understanding and meeting sector-specific compliance requirements is crucial for businesses to ensure effective identification, assessment, and mitigation of risks. Compliance requirements are wide in range and complex within certain industries. They vary in business activities, industry, and country. Some of the most heavily regulated industries are the financial services, health care, life science, and information technology industries.
Impact of Market Dynamics
Unique risks involved in different industries impact the market dynamics massively. There are frequent changes in market trends and regulations that influence industry risks globally. Here custom TPRM strategies by industry play a vital role in controlling and managing the impact of market dynamics.
Market Trends Affecting Risk Profiles
Market trends can have a significant impact on risk profiles. Trends like economic conditions, geopolitical events, globalization, technological advancements, and regulatory changes affect risk profiles the most. The only way businesses can effectively manage risk profiles is by staying updated on market trends and proactively addressing potential risk factors.
Economic and Regulatory Influences on Industry Risks
Economic and regulatory changes also influence heavily industry risks. For example, during a recession, third-party vendors may face financial difficulties, leading to contract default or service disruptions. Similarly, third-party vendor’s non-compliance with requirements and standards may expose businesses to legal, financial, reputational, and risks.
Customization of Risk Assessment Models
Customization of risk assessment models is essential for businesses to tackle challenges and risks more efficiently. The first step to customization is to be aware of industry-specific risk assessment criteria, sector-appropriate risk metrics, and custom TPRM strategies by industry. This is the most crucial step as it helps businesses figure out which customization of risk assessment models would be suitable for them.
Industry-Specific Risk Assessment Criteria
Industry-specific risk assessment criteria involve ways of evaluating potential risks that are specific to a particular industry. Some common industry-specific risk assessment criteria used in TPRM are regulatory compliance, data protection, disaster recovery, supply chain risks, social responsibility, financial stability, and industry-specific standards such as ISO, HIPAA, PCI-DSS, or other certifications.
Tailoring Risk Indicators to Sector Nuances
Each industry has its distinct characteristics, regulations, and vulnerabilities. To cater to the specific needs of each industry, the approach of tailoring risk indicators to sector nuances plays a crucial role. This approach helps businesses better identify the relevant industry-specific risks, prioritize risk mitigation efforts, and allocate resources effectively.
Incorporating Emerging Threats Relevant to the Industry
Emerging threats relevant to the industry are threats that are not well-known or understood but have the potential to harm businesses in particular industries. By incorporating emerging threats relevant to the industry into the risk assessment criteria, businesses can proactively address potential vulnerabilities, mitigate risks, and enhance overall risk management practices.
Sector-Appropriate Risk Metrics
Defining and Measuring Industry-Relevant Metrics
Businesses utilize industry-specific metrics or key performing indicators (KPIs) are the identifiers and quantifiers of risks associated with third-party relationships within specific industries. Industry-relevant metrics are measured through various tools, data sources, and assessment techniques.
Adjusting Risk Thresholds for Specific Sectors
Another effective strategy for customization of the risk assessment model is adjusting the risk threshold for specific sectors. A risk threshold is a way of setting up levels of risks with the help of measurable units with the probability of occurrences. These limits help specific sectors determine which risk thresholds are low, moderate, high, severe, and extreme. This approach helps businesses align their risk management strategies with the realities and challenges faced by industries.
Compliance Frameworks for Different Industries
The compliance frameworks have complex requirements and they vary from industry to industry. For businesses, choosing the right compliance framework that fits gets easy if they are aware of industry-specific frameworks.
Adapting to Sectoral Regulatory Requirements
Adapting to sectoral regulatory requirements is necessary as non-compliance leads to hefty penalties, data breaches, cyber-attacks, financial loss, and reputational damage.
In-Depth Analysis of Industry-Specific Regulations
Businesses need to do an in-depth analysis of industry-specific regulations and determine which regulations will be applied, what data will be protected, the steps involved, and who will be responsible for establishing and maintaining compliance. Some of the top industries and their industry-specific regulations are the following.
- Manufacturing: NERC CIP, ITAR, and EAR compliance are required
- Finance, Fintech, and Technology: PCI DSS, GDPR, and CCPA compliance are required
- Higher Education: FERPA compliance is required
- Healthcare: HIPAA and HITECH compliance are required
Ensuring Compliance with Niche Standards
Ensuring compliance with niche standards requires a systematic approach. It involves, understanding the standards, conducting internal assessments, establishing a compliance program, training employees, auditing processes, maintaining records, seeking external expertise, staying updated, fostering a compliance culture and continually improving.
Incorporating Industry Best Practices
Incorporating industry best practices is essential for solid custom TPRM Strategies by industry. Let’s dive deep into the successful industry practices and success stories.
Benchmarking Against Successful Industry Practices
Benchmarking against successful industry practices is a continuous practice to improve the performance of the business. The successful industry practices of custom TPRM strategies by industry are:
- Due diligence and monitoring
- Leverage risk intelligence tools and techniques
- Relationship segmentation
- Involve internal and external auditors
- Use automation
Learning from TPRM Success Stories in Similar Sectors
Another best industry practice is learning from TPRM success stories in similar sectors. Getting insights from experts like the ones here at Captain Compliance on how different sectors have leveraged TPRM to manage third-party risks effectively can help businesses thrive in the compliance landscape and increase overall performance. Learning from success stories is a great way to train employees and implement successfully custom TPRM strategies by industry.
Collaboration with Industry Peers
Collaboration with industry peers is another best custom TPRM strategies by industry. It allows businesses to strengthen risk management practices, reduce vulnerabilities, and protect critical assets from potential threats.
Industry Forums and Information Sharing
Industry forums and information sharing play a vital role in businesses to leverage the collective knowledge, experience, and resources of industry peers.
Participating in Sector-Specific TPRM Communities
There are many sector-specific Third-Party Risk Management (TPRM) communities worldwide. There are forums, professional networks, or online communities where experts and practitioners discuss TPRM challenges and best practices. There are also webinars, workshops, and events organized by industry associations, professional bodies, or solution providers that help connect with TPRM communities.
Collaborative Approaches to Mitigating Common Risks
Looking for opportunities to collaborate with industry peers helps mitigate common risks, increases knowledge-building efforts, enhances security, and protects sensitive data. Some of the key collaborative approaches are establishing a platform to exchange insights, conducting risk assessments, developing standardized minimum security requirements, sharing vendor due diligence reports, performing audits, and conducting training and awareness programs.
Joint Risk Mitigation Initiatives
Joint risk initiatives with industry peers strengthen TPRM capabilities, enhance resilience to third-party risks, and establish industry-wide best practices in businesses. The most common and effective joint risk mitigation initiatives are the following.
Establishing Industry-Wide Risk Mitigation Programs
Establishing industry-wide risk mitigation programs is one of the most common joint risk mitigation initiatives that help businesses effectively manage and mitigate risks in today’s dynamic business environment. Such programs not only promote collaboration, develop standard practices, and foster a risk-aware culture but also enhance the resilience and sustainability of the industry as a whole.
Shared Resources and Strategies for Risk Reduction
Shared resources and strategies for risk reduction with industry peers is another joint risk mitigation initiative that helps businesses provide access to knowledge, expertise, cost savings, and collaboration opportunities. Active utilization of shared resources and strategies for risk reduction enhances risk collective mitigation efforts that strengthen resilience and increase chances of long-term success.
Technology Adoption Aligned with Industry Needs
The automation technology adaption aligned with industry needs can drastically improve the overall efficiency and scalability of risk management programs. It identifies risks with great speed, adequately conducts due diligence, and improves collaborations with all third parties and fourth parties.
Industry-Specific TPRM Tools and Platforms
Industry-specific TPRM tools and platforms are also known as vendor risk management (VRM). They are specialized in onboarding, risk assessments, and due diligence for businesses working with third parties. They are fully focused on third-party security, privacy, and compliance issues. Here are the top 10 TPRM tools and Platforms.
- the Archer Integrated Risk Management Platform
- BitSight Security Ratings
- LogicGate Risk Cloud
- LogicManager Vendor Management System
- OneTrust Vendorpedia For Enterprises
- Prevalent Third-Party Risk Management Platform
- ProcessUnity Vendor Risk Management (VRM)
- SecurityScorecard Third-Party Risk Management
- Venminder
- Whistic Vendor Security Assessment
Leveraging Technology Tailored to Sector Requirements
There are certain things to keep in mind while selecting a technology tailored to sector requirements. It must assess risk properly, give proper visibility of supplier risk data, share contingency plans with third parties, do constant monitoring, and comply with your industry-specific regulations. Here are some industry-specific TPRM tools and platforms.
- Financial Services: RSA Archer, MetricStream, and Prevalent
- Healthcare: ProviderTrust and Symantec
- Retail and E-commerce: OneTrust Vendorpedia and RiskRecon
- Energy and Utilities: ProcessUnity and MetricStream
- Technology and IT: RSA Archer and BitSight
- Manufacturing: MetricStream and ReqView
Integration with Industry-Specific IT Ecosystems
With the rise of artificial intelligence (AI), the Internet of Things (IoT), and other technologies, it has become extremely difficult for businesses to monitor and identify risks through traditional methods and tools. It has become essential for businesses to integrate with an IT ecosystem that aligns with industry-specific requirements. This enables businesses to proactively manage third-party risks, ensure security, comply with regulations, and strengthen operations.
Training and Skill Development
A robust TPRM program is essential to protect businesses and an internal TPRM team is required to manage this program. TPRM internal team members access, monitor, and analyze the third-party relationships. It’s better to hire team members who already have some certifications in TPRM so that they can grow themselves with the advanced training in TPRM. However, there are many custom TPRM strategies by industry training and skill development programs that help internal employees get full command of TPRM from scratch.
Industry-Focused Training Programs
Industry-focused training programs on custom TPRM strategies by industry teach internal employees how to manage vendor requests, customize assessments, automate risk scoring, and more. There are TPRM expertise programs specific to the sector offered by the industry experts which helps the team continuously learn to adapt to industry changes.
Developing TPRM Expertise Specific to the Sector
Some of the top TPRM expertise programs that are specific to the industry are TPRM fundamentals, certified third-party risk professional (CTPRP), certified third-party risk assessor (CTPRA), certified information systems security professional (CISSP), certified in risk and information systems control (CRISC), certified regulatory compliance manager (CRCM), and certified enterprise risk professional (CERP).
Continuous Learning to Adapt to Industry Changes
Continuous learning to adapt to industry changes is essential for businesses in most industries. One of the primary reasons is the constant change in the third-party risks because new technologies, regulations, and market dynamics introduce new threats. It also helps the internal team to implement emerging best practices, industry standards, and tailored strategies to address the specific industry challenges and risks.
Closing
Custom TPRM Strategies by Industry should be a priority in every business. Especially those businesses who want to have greater success in today’s competitive business environment and complex compliance landscape.
If you’re looking for all-in-one third-party risk management expert advice, consider Captain Compliance. To learn more about Captain Compliance and how it works, book a meeting with one of our compliance experts today.
FAQs
What are the 5 risk management strategies?
The 5 risk management strategies are risk identification, due diligence, contractual agreements, continuous monitoring, and contingency planning.
What are the four risk control strategies?
The four common risk control strategies in TPRM are risk avoidance, mitigation, transfer, and acceptance.
What are the 5 components of risk management framework?
The 5 components of the risk management framework are risk identification, assessment, mitigation, monitoring, and reporting.
What are the five 5 elements of risk management?
The five elements of risk management in TPRM are risk identification, risk assessment, risk mitigation, risk control, and risk reporting governance
