Effective risk management is a strategic tool and competitive advantage. Supplier relationships can impact an organization’s reputation, financial performance, and ability to react. Now, more than ever, organizations are investing in strategies to help monitor and assess potential risks such as pandemics, cyber threats, terrorism, natural disasters, and financial and reputational threats.
Although it is impossible for risks to be completely eliminated, putting in place effective planning, processes, tools, and technologies can help an organization manage operational risks more effectively. Risk management technology can also help to provide your organization the visibility it requires to more effectively monitor, assess, and track threats, which may help to keep your business afloat when disaster hits.
Your risk application should be able to assess the following:
1. Third-Party Risk Management
A risk technology platform should help facilitate and monitor third-party risks within your organization’s supply chain. Leading platforms include the ability to send questionnaires directly to your suppliers to gather and capture additional information on their performance, policies, and business continuity plans. This helps to automate, track, and securely receive information that your organization requires in order to assess your third party.
If you currently do not have a risk assessment in place, some cloud-based platforms also offer pre-configured templates of best practice assessments to help provide a starting foundation. Based on your supplier’s response, your risk platform will calculate a rating of the risks at hand and present these findings in a dynamic analytics dashboard with automated alerts. To better assess your third-party relationships, these tools and platforms should be able to provide reporting capabilities and help tier your suppliers based on your organization’s risk scale.
2. Customer Data and Personally Identifiable Information (PII)
Some suppliers may require access to your company’s data, including customer, employee, or PII that can identify an individual. If your supplier or third party does not have policies and procedures in place to handle PII securely, this can be a significant risk to the safety of your customers and employees, and your organization’s reputation. A leading risk technology platform will allow you to assess a supplier’s policies, procedures, and protocols to effectively manage and protect PII, and come with pre-configured templates and questionnaires to help capture the appropriate data collection needed to assess how it is safeguarded and handled (e.g., following General Data Privacy Regulation [GDPR] guidelines).
3. Business Continuity and Disaster Planning
Business continuity and disaster planning is the process of creating systems of prevention and recovery in dealing with a potential threat – such as a fire, flood, cyber, or pandemic – to an organization. It is important for an organization to assess their supplier’s continuity and disaster planning to ensure that if a threat arises, they will have a back-up and recovery plan in place. Modern risk platforms have dashboards and heat maps to identify your supplier’s criticality, information security, geographic risks, and reputational strength. This provides risk managers with a consolidated real-time view of suppliers that are more likely to face a threat or disaster.
4. Assessing Supplier’s Reputational, Regulatory and Financial Health
Organizations also need to evaluate their supplier’s reputational, regulatory and financial health. A supplier’s financial stability, their ability to follow required regulations, and their history of practicing good business ethics are all critical in determining risks, especially when associating them with your organization/ brand. Allow suppliers to securely provide information directly within the platform to help your organization fully assess all areas. Additionally, a risk assessment platform should be able to profile and group your suppliers based on their responses and ratings, and introduce different risk managers based on supplier responses.
5. Automating and Streamlining Your Risk Assessment Procedures via Data and Analytics
A leading risk platform should help to fully automate your risk assessment and procedures using data. Your risk platform should eliminate any manual or unsecure way of obtaining information from your suppliers. Questions, answers, and information should all live securely within your risk platform, and ratings should be automated based on your organization’s scale. Your risk platform’s reporting should also help to remove the need to track through spreadsheets, replace calendar email reminders on re-assessments, and provide one platform for audit trails. Leading risk platforms provide the reporting required and help to automatically rate and tier suppliers based on your organization’s configured risk assessments. This automation and visibility helps to make risk assessment more efficient and effective.
To learn more about Business Spend Management, please see:
- 5 Signs You’re Ready to Address Business Spend Management with Technology
- 5 Steps Before Beginning a BSM Implementation
- Achieving Purchasing Automation Goals with Effective Supplier Enablement
- "PO"sition Your Business for Success by Optimizing Purchase Order Use