The Value of Third-Party Risk Management: Insights from the EY 2023 Global Survey
The EY 2023 Global Third-Party Risk Management Survey has highlighted the growing importance of third-party risk management (TPRM) in organizations worldwide. With nine out of 10 respondents indicating direct investment in their TPRM program, it is clear that companies are recognizing the value of understanding and mitigating risks associated with third-party relationships.
According to Joseph Kelly, EY Oceania Third-party Risk Leader, the key challenge for organizations is to identify, manage, and mitigate risks associated with third-party relationships. While completely eliminating third-party risk is not feasible, companies are now focusing on implementing centralized and data-driven approaches to enhance their risk management capabilities.
Leading organizations are leveraging automation and external reports to gain real-time insights into their third-party network, enabling them to rank third-parties across risk domains and develop targeted responses. Scott McCowan, EY Americas Risk Management Leader, emphasized the importance of a data-driven approach in screening third-parties to ensure better coverage and continuous monitoring.
In addition to regulatory pressures, factors such as data breaches, supply chain disruptions, and board pressures are driving organizations to invest in TPRM programs. Cybersecurity and digital risk were identified as the top risk domains in the survey, followed by strategic risk, financial viability risk, and environmental, social, and governance (ESG) and sustainability risk.
Kanika Seth, EY Global Financial Services Third-Party Risk Leader, highlighted the importance of integrating ESG commitments into third-party risk assessments and re-evaluating risk governance practices. The next step for organizations, according to Kelly, is to leverage the wealth of data available through TPRM programs to turn them into strategic enablers.
As companies continue to navigate a complex and interconnected business environment, the EY 2023 Global Third-Party Risk Management Survey underscores the critical role of TPRM in enhancing risk management capabilities and driving strategic decision-making.
