The involvement of third parties in the functioning of modern companies is crucial
because the modern company relies on cloud computing, software, IT-support,
consultancy, payments, logistics, and numerous other functions. Such partnerships
help businesses grow rapidly and learn while doing so, however, there are some
risks involved.
For example, a third party could be handling sensitive data or provide services that
are essential to your company’s processes. If something happens to this partner in
terms of a security breach, financial problems, or reputation, it will affect you too.
That is where TPRM comes into play.
What Is Third-Party Risk Management?
Third-Party Risk Management is a suite of policies, procedures, controls, and
governance that help an organization assess and manage risks from its third
parties.
A third party includes but is not limited to vendors, contractors, consultants, service
providers, solution providers, affiliates, subsidiaries, subcontractors, and any other
organizations offering products and services to the organization.
It is important to note that TPRM does not aim at removing all risks. Rather, it is a
tool for understanding risks and choosing ways of managing them.
As organizations become more and more dependent on outside vendors, TPRM has
gone beyond a mere vendor questionnaire and become a continuous process
requiring visibility.
Why Does TPRM Matter?
Third parties may impact the data, financials, operations, reputation, and strategic
objectives of an organization. Increased regulation has also come into play in terms
of demonstrating an understanding of the risk involved in working with third parties.
A strong TPRM program should help answer questions such as:
● Which vendors are most critical to the business?
● What data or systems can they access?
● What risks does each relationship introduce?
● Are appropriate controls in place?
● Which vendors require closer attention?
● Has a vendor’s risk profile changed?
Portend helps address the challenge of changing vendor risk by providing
continuous external monitoring across cyber, financial, operational, and
reputational risk.
What Types of Third-Party Risk Should Organizations Consider?
TPRM is no longer focused only on cybersecurity. The risk associated with a third
party depends on the nature of the relationship, the services provided, and the
organization’s exposure.
Common risk categories include:
● Cybersecurity Risk: The possibility of data exposure or loss resulting from a
technical failure or security incident.
● Operational Risk: Risk resulting from inadequate or failed processes, people,
or systems.
● Financial Risk: Risk associated with a third party’s financial condition or
failure to meet financial expectations.
● Reputational Risk: Risk that a vendor’s actions, security incidents, legal
issues, or poor practices could negatively affect the organization’s
reputation.
● Strategic Risk: Risk resulting from a third party’s activities not aligning with
strategic objectives.
● Transaction Risk: Risk associated with service or product delivery failures,
inadequate capacity, technology failure, human error, or fraud.
● Compliance Risk: Risk resulting from violations of laws, regulations, internal
policies, or contractual requirements.
ESG Risk: Risk associated with environmental, social, and governance
impacts.
Organizations should evaluate these risks according to their risk appetite and
the nature of each third-party relationship.
With Portend, teams can look beyond cybersecurity and maintain visibility across
multiple areas of external vendor risk, helping create a broader picture of the third-
party risk landscape. Portend’s Solutions
Inherent Risk vs. Residual Risk
Understanding the difference between inherent and residual risk is fundamental to
TPRM.
Inherent risk is the degree of risk inherent to the third party without taking into
account its controls. Things that can contribute to inherent risk include the nature of
services rendered, type of data being accessed, geographical location, and
monetary value.
Residual risk is the risk that remains after controls have been assessed and
identified risks have been treated.
A simple way to calculate risk is:
Risk = Impact × Likelihood
Organizations can then decide whether to accept, remediate, share, transfer, or
avoid the identified risk.
Portend’s ability to help prioritize high-risk vendors supports this risk-based
approach, allowing teams to focus their attention on relationships that may
require greater scrutiny.
Why Continuous Monitoring Matters
Risk monitoring is important due to the changing nature of third-party risks.
Assessments and questionnaires offer just a snapshot of vendor risks since cyber
attacks, financial problems, or other issues may arise in the period between reviews.
● Point-in-time assessments: Provide a snapshot of vendor risk at a specific
moment.
● Changing risk profiles: Vendor risks can evolve between scheduled
assessments.
● Continuous monitoring: Helps identify important changes as they occur.
● Ongoing TPRM: Extends beyond due diligence to contract review,
monitoring, disengagement, and continuous improvement.
How Portend Helps: Portend addresses this gap through continuous external
monitoring, giving teams greater visibility into changes in vendor risk between
scheduled assessments.
How Does Portend Help With TPRM?
Portend is designed for Procurement, IT, and Security teams looking for a more
continuous approach to third-party risk management.
● Continuous Vendor Monitoring : Portend continuously monitors vendor risk
profiles across cyber, financial, operational, and reputational areas. This can
help organizations maintain a more current understanding of their third-
party ecosystem.
● Real-Time Risk Alerts: Vendor risk can change quickly. Portend provides risk
alerts that can help teams identify emerging developments instead of
waiting until the next scheduled assessment.
● Prioritizing High-Risk Vendors: Organizations cannot give every vendor the
same level of attention. Portend helps teams prioritize high-risk vendors so
risk professionals can focus their time and resources where they are most
needed.
● Reducing Manual Reviews: Traditional TPRM processes can involve
significant manual effort to collect information, review vendors, track
changes, and determine which relationships need additional attention.
Portend is designed to reduce manual review cycles and help teams move from
reactive compliance workflows toward proactive vendor intelligence.
Moving From Reactive to Proactive TPRM
The difference can be simple:
Reactive TPRM: Assess → Wait → Discover an issue → Investigate → Respond
Proactive TPRM: Monitor → Detect → Prioritize → Investigate → Respond
Portend supports this shift by providing continuous external visibility into vendor
risk. It does not replace due diligence, contracts, internal controls, or human
judgment. Instead, it can give TPRM teams more timely information to support
those processes.
How Portend Helps
Portend helps organizations take a more proactive approach to third-party risk
management by providing continuous external monitoring across cyber, financial,
operational, and reputational risk. Instead of relying only on periodic assessments,
teams can gain ongoing visibility into changes in vendor risk profiles, receive risk
alerts, and prioritize vendors that require closer attention. Portend also helps reduce
manual review cycles, allowing Procurement, IT, and Security teams to spend less
time gathering and reviewing vendor information and more time responding to
meaningful risks. Portend TPRM
Ultimately, effective TPRM is not just about knowing whether a vendor was safe
when it was assessed. It is about continuously understanding how that risk changes
and having the right visibility to act on it.