Building Strategic Third-Party Risk Management: Five Essential Principles for Success
Third-Party Risk Management has evolved from a simple compliance exercise into a mission-critical business function. Yet many organizations still struggle with programs that create more bureaucracy than security, frustrate vendors, and miss genuine risks.
About the Author
Matthew Moog, CISA, is Principal in Risk Managed Services at EY, where he specializes in third-party risk management strategy and implementation. With extensive experience helping organizations transform their TPRM programs from compliance obligations into strategic business enablers, Matthew brings deep expertise in process optimization, governance frameworks, and risk assessment methodologies.
Drawing from years of TPRM implementation experience, here are five strategic principles that separate effective programs from expensive compliance theater.
1. Define Your Program Scope with Purpose
When it comes to defining a TPRM program's scope, the last 15 years have been very assessment heavy. Control self-assessments helped organizations avoid a lot of overhead - giving access to information, reducing risk, and building the ability to be resilient during breaches, outages, or negative news. But you have to look at risk differently now. Is this a new, existing, or changed relationship? What data is involved? Why am I redoing this every year with the same third party?
We need to shift from just preventative hygiene to proactive resilience - controls, deep dive assessments, penetration testing, architecture reviews, performance monitoring, QBRs that are TPR-focused. Think about joint roadmap evolution with your vendors and partners. The ability to access data en masse means risk is much higher from a third-party perspective, and you need to be setting actions in real-time. Assessments don't reduce risk in real-time. A modern TPRM program needs to keep this in mind.
2. Process First, Automation Second
Too many organizations jump to automation without understanding the impact. In my career, I've seen countless organizations rush into automation solutions before they've properly mapped out what they're trying to achieve. The result is often more complexity, not less.
Consider the typical workflow: you have manual follow-ups after assessments, responses come back with gaps, emails go back and forth to fill those gaps. Most organizations then try to automate this entire process - requiring vendors to complete one document, answer 10 questions, and submit through a portal, only to receive an automated email back highlighting gaps. But often, one phone call would have been more effective and relationship-preserving. Instead, the automation introduced unnecessary complexity.
Before you automate anything, ask yourself fundamental questions: Why does this process exist? What complexities will automation create? What blind spots might emerge? Define and refine your processes first, then figure out how automation can enhance them.
3. Develop Strategic Assessment Approaches
Assessments are a vehicle, not the vehicle. When organizations conduct assessments properly, they get a stable set of quality results with no surprises over the long term. Here's the reality: without major organizational changes, vendor control environments don't fundamentally shift. Changes are usually incremental - small-scale adjustments rather than wholesale transformations in cybersecurity, TPRM, or compliance programs.
Look at assessments from this perspective: will this effort bear fruit? If not, then what actually matters? I've seen organizations ask over 300 questions in their assessments. What's the point? Vendors get frustrated, and frankly, most of those questions aren't driving meaningful risk insights. Often, 30 well-crafted questions can provide the same level of understanding. Ask what's truly meaningful for your risk posture. If you're asking the same questions repeatedly without acting on the responses, you need to question why you're doing this in the first place.
Be strategic about when, why, and how you use questionnaires, and supplement them with other data sources. We're seeing exciting developments with AI - deep learning models trained on risk modeling that can evaluate inherent service risks, flag contractual considerations, and identify other potential risk factors with full source citations. Traditional assessments won't capture this kind of intelligence.
Assessments are definitely not the only evaluation vehicle available. The key question becomes: when should you use different types of evaluation? What's the right mix of due diligence processes, real-time monitoring, AI-driven insights, and traditional assessments for your specific risk landscape?
4. Build Effective Governance Structures
Here's what most organizations get wrong: they think the most important TPRM conversation happens after the assessment is complete. It's actually the least important conversation. The critical discussions need to happen upfront - when you're defining what each risk point means for your organization, who it affects, and what the real-world consequences look like. Understanding probability and impact to your organization is essential. Without that context, you're just going through the motions rather than having meaningful discussions about actual risk.
You need four people at a bare minimum: Who represents the business? Who represents cyber? Who represents resiliency? Who represents compliance? You might also need engineering, cloud, and other functions depending on your organization.
Getting the right stakeholders involved from the beginning ensures that your TPRM program addresses real business needs rather than just checking compliance boxes. When these voices are aligned, risk decisions become strategic business decisions rather than isolated security assessments.
5. Design for Reporting Excellence
Think about this from a data architecture perspective. Start with the data - how does everything interact with each other? When you establish clear foundations and relationships between your data elements, reporting becomes exponentially easier. Build your data structures with reporting in mind from day one - consider how systems connect, how objects relate to each other, and what relationships matter most for decision-making.
It's like running a sales play. Operational efficiency will be a constant - each stage has its expectation for time and deliverables. There are longer-term issues to look at as well. For example, cloud providers and their issues can slowly escalate to a point where action needs to be taken. You need the right metrics to track these trends over time, and it's perfectly acceptable to monitor without reacting if you haven't reached a threshold that requires intervention.
Reports should serve a purpose, not just exist because they can. Make sure you're only generating and reviewing reports when they're actually needed for decision-making. The key question to keep asking yourself is: How do I make this TPRM function better? Your reporting should always support that goal.
Transform Your TPRM Program Today
These five principles represent the foundation of strategic third-party risk management that drives business value rather than compliance overhead. But implementation details matter - the difference between a program that accelerates business opportunity and one that suffocates it lies in the specifics.
Ready to build a TPRM program that works? Download our comprehensive Strategic Guide to Third-Party Risk Management for detailed implementation frameworks, expert insights from industry leaders, and proven methodologies that transform vendor management from operational burden into competitive advantage.