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Term: Third Party Risk Management (TPRM)

Third-Party Risk Management (TPRM) involves analyzing and minimizing risks resulting from outsourcing to third parties and vendors.

What is TPRM?

The purpose of a third-party risk assessment is to assess the risks associated with a third-party relationship. As part of any third-party risk management program, the framework provides information and an overview of third-party potential risks, standards, and compliance requirements.

Third Party Risk Management (TPRM) is a framework any organization should have in place to assess, manage and mitigate Third Party Risks on an ongoing basis. This is usually done by implementing a software, or using hoggo’s My Vendors tool.

What Are Third Party Risks?

Working with vendors can present a number of risks for organizations. Common types of third-party risks include:

  • Privacy risk: The risk of mishandling personal data by the vendor and exposing the company to fines, violations and brand damage.
  • Operational risk: A risk from a third party disrupting business operations. Business continuity plans and an incident response plan are typically used to manage this risk.
  • Legal, regulatory, and compliance risk: Any threat to your compliance with local law, regulation, or agreement posed by a third party.
  • reputational risk: Negative public opinion can be caused by a third party. Dissatisfied customers, inappropriate interactions, and poor recommendations are only a few examples of this risk.
  • Financial risk: The possibility that a third party will adversely affect your organization’s finances.
  • Strategic risk: A third-party vendor might fail to meet your organization’s business objectives.
  • Cybersecurity risk: The risk of exposure or loss resulting from a cyberattack, security breach, or other security incident.
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