So many organisations depend heavily on third-party vendors, partners and service providers to fulfil their commercial objectives these days, our world is increasingly interconnected. Yet the ‘extended enterprise’ comes at a price: heightened exposure to risk.
From data breaches to regulatory violations, the actions - or inactions - of third parties can have serious knock-on consequences. Third party risk management (TPRM) has evolved from being a recommended practice to a regulatory necessity; a compliance imperative as organisation are held to account for their third parties’ actions.
What compliance risks could you be exposed to through third party relationships?
Third parties can introduce a wide range of compliance risk throughout the supply chain. These include:
- Data breaches and cybersecurity failures - weak security controls at a third party can expose sensitive data and violate data protection laws.
- Sanctions and anti-bribery violations - engaging with a sanctioned entity or one involved in corruption can trigger regulatory penalties.
- Inadequate controls and oversight – a vendor operating without compliance procedures may jeopardise your ability to meet your own audit or certification requirements.
Each of these risks can quickly cascade into legal action, reputational damage or costly remediation efforts for your business.
Many organisations make the mistake of treating TPRM as a checkbox activity – something that’s over and done with in onboarding. Yet compliance requires ongoing monitoring and governance. You need visibility into your vendor ecosystem and beyond preventing a breach here or passing an audit there, the goal should be to develop a culture of accountability, transparency and compliance throughout the extended enterprise. After all, your compliance is only as strong as your weakest third party.
Leverage GRC technology and TPRM software to ensure compliance
Third party risk management software plays a crucial role in helping organisations meet and maintain compliance obligations by automating, standardising and strengthening oversight of third party relationships.
One of the core benefits of TPRM software is the ability to centralise and maintain an up-to-date inventory of all third-party relationships. This includes details about each vendor’s services, access to sensitive data, geographic footprint and risk classification. By organising third parties based on their inherent risk and regulatory exposure, you can ensure that no vendor is overlooked and that due diligence is conducted in proportion to the level of risk - aligning with expectations set forth by laws and industry-specific compliance frameworks.
Another major advantage is automation. TPRM tools streamline the process of conducting initial and ongoing risk assessments. These systems can automatically distribute and score standardised due diligence questionnaires, conduct sanctions screenings, and trigger follow-up workflows for high-risk findings. This not only reduces the administrative burden on compliance teams but ensures assessments are performed consistently and in line with regulatory requirements. The result is a more proactive and evidence-based approach to compliance.
Contracts are another key area where TPRM software strengthens compliance. Many platforms integrate contract lifecycle management, ensuring that necessary legal protections - such as data privacy clauses, audit rights and breach notification requirements - are included by default. They can also track contract renewals and flag missing documentation. This helps ensure that all vendor agreements meet compliance standards and that no obligations fall through the cracks.
Modern TPRM tools also support continuous monitoring, which is essential in today’s dynamic risk environment. Rather than relying solely on annual assessments, you can receive real-time updates on changes in a vendor’s risk profile, such as cyber risk ratings, financial instability or negative media coverage. These alerts enable your team to act quickly if a third party’s behaviour begins to threaten compliance, reducing the likelihood of surprises during audits or incidents.
Thanks to detailed audit trails and standardised reports, it’s also much easier to demonstrate compliance to regulators. Every assessment, decision, and communication is logged and can be pulled into reports tailored for audits, internal reviews or board updates. This level of documentation is often a regulatory expectation, and having it readily available can save valuable time during an investigation or formal audit process.
What’s more, TPRM tools often integrate with broader GRC or enterprise risk management systems, allowing third party risks to be aligned with organisational risk appetites, compliance policies and escalation protocols. This ensures that vendor-related risks aren’t managed in isolation, but are embedded into the broader compliance and governance framework of the organisation.
Actualise compliance with Decision Focus third party risk management software
Decision Focus TPRM ensures that the risks associated with third parties don’t compromise your organisation's security, compliance and operational integrity.
Read more about our award winning third party risk management tool here or download our TPRM brochure.