[author: Nelson Pratt]
From small businesses to enterprise companies, third-parties have long formed an intricate, but critical web that supports business functions. Cloud-based technology, payroll and accounting, shipping, ecommerce and of course the good ol’ component supply chain for manufacturers – these functions are often delivered cheaper, and at higher quality, by a third party versus trying to do it all in-house.
Each dependency in the web impacts those around it. When times are good, strong vendor relationships contribute to mutual growth.
But there’s a potential for parts of the system to fail. And in extreme cases such as the current COVID-19 pandemic, the whole system may be in disarray. Large, disruptive events can also complicate an organization’s ability to conduct proper third-party due diligence, exposing firms to even greater risk.
In today’s interconnected – and thanks to social media, increasingly transparent – business environment, your third-parties’ risks are your risks. A bad decision by a compromised third-party can permanently harm a company’s reputation. The scale of impact of this risk tends to increase as unstable…
