Third-party and supplier risk management software gathers and manages vendor risk data to protect companies from issues across various risks. These risks may include financial, legal, strategic, reputational, ethical, information security, operational, cybersecurity, environmental, and geopolitical risks.
This type of software assesses, monitors, and mitigates risks that could negatively impact company-supplier relationships. Compliance and risk officers typically use third-party and supplier risk management software. Additionally, companies benefit from this software by minimizing risks from unreliable suppliers.
It also helps reduce the chances of reputational damage associated with high-risk vendors, lessens the likelihood of business disruptions, and lowers the potential for negative financial consequences. Third-party and supplier risk management software is usually implemented as part of a broader governance, risk, and compliance initiative.
A third-party and supplier risk management tool is different from vendor security and privacy assessment software, as the latter focuses specifically on cybersecurity and privacy third-party risks but does not address other risk domains, such as financial or environmental risks.
Third-party and supplier risk management also differs from contractor risk management, which assesses the unique risks associated with hiring an individual or organization to complete a specific project rather than a vendor engaged in providing goods or services as part of their normal business operations. It also stands apart from various types of supplier or supply chain management software because those typically don’t have robust vendor risk analysis capabilities.
To qualify for inclusion in the Third Party and Supplier Risk Management category, a product must:
- Include standard workflows and templates to assess and evaluate a wide range of third-party risks, including financial, legal, strategic, reputational, ethical, information security, operational, cybersecurity, environmental, and geopolitical risks
- Include standard reports on third-party risk exposure
- Remediate third-party risks in alignment with internal policies
- Monitor ongoing vendor performance and any third-party risk changes
