According to a 2022 Gartner survey, 84 percent of executive risk committee members say that “misses” in third-party risk disrupted their business operations. That statistic is alarming, considering that most enterprise organizations have extensive third-party relationships with vendors, suppliers, and partners for business innovation or operational efficiency.

Moreover, most companies engage with third parties to handle administrative activities, such as payroll. Such engagements often deal with sensitive organizational and customer data – and if those relationships unfold without proper governance in place, they could introduce your organization to significant risk, known as third-party risk.

So, how do most companies manage third-party risk? Usually, they put a third-party risk management program into place; this provides the proper funding, visibility, and resources to conduct a third-party risk assessment and then respond to any threats from the risks you find.

As companies scale rapidly to serve their clients, their need to use more third-party vendors increases, making it untenable for companies without a coherent vendor risk management function.

This is where a robust third-party risk management software platform can help.

What Is Third-Party Management Software?

In simple terms, third-party management software is a set of tools that can manage the end-to-end lifecycle of vetting, selecting, onboarding, and managing third-party vendors for a company. These tools would typically contain a comprehensive management solution that can help you manage different types of vendors depending on their function (supply chain, technical support, payroll, and so forth).

Because onboarding and entrusting many third-party vendors with organizational data is fraught with risk, companies also deploy dedicated risk management solutions to manage, automate, and mitigate the risk associated with third-party vendors.

What are Third-Party Risk Management Tools?

Third-party risk management (TPRM) tools and platforms enable your organization to vet and onboard the correct set of vendors by running each through a vendor risk assessment template using the following steps.

  1. Assess the reputation of third-party vendors and providers using stringent vendor risk assessment (VRA) questionnaires and market research data to arrive at a risk scoring mechanism. This helps an organization select the right vendor based on their needs.
  2. Monitor the performance and diligence of third-party vendors on an ongoing basis, based on their IT and business framework, for any real-time indicators that might put the organization at reputational, legal, or financial risk.
  3. Use a consistent approach to vendor onboarding and off-boarding workflows. This lets an organization set clear expectations and streamline its operations, bringing transparency and accountability to the third-party relationship.

Five Reasons Why it’s Important to Use Third-Party Risk Management Software

There are many advantages for companies considering investing in a third-party risk management software platform. The top five reasons to do so are below.

  1. Plan for business continuity
    As the Gartner survey above highlights, many companies must spend adequate time and resources to assure business continuity within their third-party relationships. If a critical supplier suddenly becomes unavailable, that could cause severe organizational disruption.
    For example, if a third-party IT vendor suffers a significant disruption in its technology or people functions, that could also bring down the organization that engaged the vendor. TPRM software could monitor such scenarios and surface them with early warning signals for the executive leadership to take immediate action.
  2. Reduce dependency on critical functions
    Suppose your organization depends on third-party vendors for critical functions such as payroll or IT support. In that case, your TPRM software platform can flag such scenarios for your team to diversify the mix of third-party service providers to reduce the dependency on a single point of failure.
    Furthermore, with redundancy built into the organization, you can mobilize other vendors to recover the lost time even if a single vendor fails to deliver to business commitments and service levels.
  3. Monitor for upholding brand reputation
    Third-party vendors might be engaged for a specific function with your organization. Still, their actions or methods of doing business might also significantly affect your organization’s brand. For example, just imagine the nightmare your company would suffer if your crucial supplier used slave labor or a critical tech vendor’s poor security led to your customers’ data ending up on the dark web.
    Using TPRM software to monitor incidents in each of your third-party vendor relationships can help your communications team be aware of unsavory business incidents that might have occurred at your third-party vendor premises and prepare appropriate remediation measures.
  4. Supporting shareholder reporting and responsibilities
    As a public-facing company, your leadership must align with Environment, Social and Governance (ESG) and regulatory standards (for example, the General Data Protection Regulation), including occupational health and safety protocols.
    Your TPRM software platform can monitor your third-party vendor relationships for any signals of them failing to align with such commitments. It can also provide your procurement team with the proper guidance to review and off-board non-performing vendors if necessary.
  5. Mitigating IT and cyber risk exposure
    Any third-party vendor commitment can involve significant access to your organizational data. TPRM software can help you monitor the preparedness of your vendor relationships to identify cyber threats striking through your supply chain and then take necessary actions to defend your technology stack against such scenarios.

Best Practices for Third-Party Risk Management

Managing a large pool of third-party vendors for your company might seem overwhelming. Several best practices can help you tackle that challenge into a manageable, sustainable, successful program.

  • Deploy a comprehensive risk intelligence team to monitor all third-party vendor engagements continually.
  • Gain leadership support from your company to invest in the due diligence and Know Your Client (KYC) and Anti Money Laundering (AML) regulations for your third-party vendors.
  • Perform regular audits of your third-party vendors to evaluate their readiness to uphold security, health, and governance standards.
  • Invest judiciously in your organization’s IT infrastructure and security stack to shield yourself against external attacks.

For your reference, here is an article with a complete list of best practices for managing operational risk for third-party vendors.

Which Industries Benefit Most from TPRM Software?

Organizations in highly regulated industries benefit significantly from TPRM solutions. These include financial services, healthcare, and pharmaceuticals. TPRM tools allow centralized tracking of vendors. This enables compliance and avoids regulatory issues.


Other industries also achieve advantages with TPRM software. Retail, manufacturing, and technology utilize third-party vendors heavily. Onboarding and assessing vendors efficiently with TPRM reduces disruptions. Any business engaging third-party providers should consider TPRM capabilities.


TPRM ecosystems automate assessment processes for vendors. Dashboards centralize data like risk profiles and SLAs. Customizable risk monitoring and mitigation features are critical. Also, stakeholders get complete visibility into inherent vendor risk. This strengthens cybersecurity across the third-party ecosystem.


TPRM software also helps meet various compliance requirements. These include regulations like the National Institute of Standards and Technology (NIST) and data privacy laws. TPRM solutions provide automation, visibility, and control over an expanding third-party ecosystem.

Key Features to Look for in TPRM Software

When evaluating TPRM software, some key features to look for include:

  • Centralized vendor database to store due diligence documents, contracts, assessments, and other information in one place
  • Risk scoring based on vendor questionnaires, financial stability, past performance, and other metrics
  • Workflow automation for processes like onboarding, approvals, renewals, and offboarding
  • Real-time monitoring and notifications related to service disruptions, security events, financial changes, compliance lapses, etc.
  • Custom risk assessment templates to evaluate vendors based on internal policies and external regulations
  • Reporting tools to analyze vendor data, risk profiles, and performance trends
  • Integration capabilities with existing systems like procurement, Enterprise Resource Planning (ERPs), and Governance, Risk and Compliance (GRC) platforms

Choosing the Best TPRM Software or Tools for Your Organization

Selecting the right TPRM software requires understanding your organization’s requirements and challenges. Key considerations include:

  • Evaluate TPRM solutions based on your organization’s needs and challenges. Prioritize industry-specific compliance capabilities and workflow flexibility.
  • Assess the ability to scale globally and integrate with existing systems. Compare deployment options, security features, and support services.
  • Map workflows and requirements through stakeholder interviews. This will help narrow down the top solutions for further evaluation.
  • Select a TPRM platform that reduces vulnerabilities through continuous monitoring and automated risk mitigation. Leading options include OnTrust, Prevalent, ProcessUnity, and BitSight.
  • The right TPRM software provides visibility and control over inherent risks across third parties. It strengthens security posture and avoids data breaches from supplier risks.

Manage Your Vendors With Ease With ZenGRC

Maintaining and scaling a business by engaging third-party business providers is possible today. However, you can safely manage the risk of engaging with many third-party providers using the right TPRM software platform.

The ZenGRC is a comprehensive solution that can bring all your third-party relationships under one roof so you can more easily manage and mitigate third-party risks.

If you would like to know more, schedule a demo today to learn how ZenGRC could help your company prepare to engage with your third-party providers correctly.