It’s a popular reality TV show format: contestants are stranded together—perhaps on a remote desert island, for example—to compete in a variety of challenges to try and win things like rewards, immunity, and a large cash prize. This is, of course, while all at the risk of being eliminated at any stage in the game. Popular reality competition TV shows like this offer a compelling analogy for third-party risk management. Third-party risk management similarly demands outwitting the odds, outplaying new challenges as they emerge, and striving to remain the last one standing.
SAI360 and a leading industry analyst group viewed third-party risk management through this lens in a webinar titled Five Lessons about Third-Party Risk You Can Learn From Reality TV Shows. The conversation focused on how reality competition contestants must essentially work to “outwit, outplay, and outlast” their competitors in a similar way to how businesses must strive to effectively leverage third-party relationships to remain competitive.
Here, parallels were drawn between the strategies of reality show contestants and businesses aiming to optimize their third-party relationships. Just as contestants navigate ever-changing alliances and challenges, businesses must be agile and resilient in the face of disruptions to ensure they remain “the last one standing” in the end.
Below, we highlight five lessons from reality TV competition shows that are applicable to the third-party risk industry.
Five Lessons for Third-Party Risk Management Programs
1. Identifying Beneficial Relationships: Just as contestants size up their teammates to form strategic alliances, businesses must understand which third parties will be most beneficial to their strategy. It’s crucial to classify these relationships, understanding which are critical, customer-facing, or beneficial in other areas.
2. Evaluate Third-Party Risk Management Through Multiple Lenses: Contestants must assess potential allies from various perspectives, understanding their strengths and weaknesses. Similarly, businesses should evaluate third parties from different risk perspectives, such as business continuity, privacy, and geographical risks.
3. Don’t Let Others’ Mistakes Lead to Your Losses: Contestants must adapt to the changing dynamics and ensure that their mistakes don’t lead to collective failure. In business, it’s essential to monitor third parties closely, helping them recover from challenges and re-evaluating relationships that no longer align with the company’s goals.
4. Mitigate Risk Throughout the Relationship Lifecycle: Contestants often face unexpected shake-ups, requiring them to adapt and rebuild relationships. Similarly, third-party risk management is a continuous process, from the initial onboarding to the end of the relationship. It’s vital to re-evaluate risks and ensure that third parties remain aligned with the company’s objectives.
5. Be an Advocate for Your Third-Party Risk Management Strategy: Just as contestants must be prepared for unexpected challenges, businesses must advocate for their third-party strategies, ensuring they have the resources, technology, and executive support to adapt to changing circumstances. This involves making third-party risk visible within the organization and ensuring that the strategy evolves with changing risks and requirements.
Blueprint for Agility: Three Questions Organizations Must Address
Below, we highlight three additional takeaways from the webinar regarding ways to ensure your organization thrives:
How Can Prioritizing Relationships Mitigate Third-Party Risk Management?
In today’s dynamic business landscape, third-party relationships are more crucial than ever. Whether it’s vendors, suppliers, strategic alliances, or resellers, these partnerships are indispensable for running a successful business. They play a pivotal role in fostering innovation, driving growth, delivering to customers, expanding operations, and introducing cutting-edge market offers.
However, it’s essential to recognize that not all aspects of these relationships are beneficial. Recent headlines across various media platforms highlight the potential risks associated with third parties. As businesses increasingly rely on a growing ecosystem of third-party partners, these entities become prime targets for cyberattacks and operational failures. Such vulnerabilities can have far-reaching consequences, affecting customers, operations, and the overall business.
In essence, while third-party partnerships are integral for business growth and innovation, they also come with inherent risks that organizations must be vigilant about.
In What Ways Is Third-Party Risk Management Evolving?
Over the past decade, regulations from entities like the Office of the Comptroller of the Currency (OCC) and the International Organization for Standardization (ISO) have emphasized third-party data controls. However, recent trends indicate that merely managing the compliance of third parties is not enough. The global pandemic underscored that even fully compliant entities can face significant risk exposure.
For example, over the past two to three years or so, the focus has shifted from mere compliance to holistic risk management concerning third-party relationships. This shift is not only a response to adverse outcomes but is also driven by directives from boards and executives. Interestingly, while proactive measures often face budget constraints, there’s always room for retroactive solutions to address third-party risk.
There is a great deal of investment happening now in third-party risk management automation, specifically regarding platforms that automate their third-party risk.
What are Some Key Drivers of Third-Party Risk Management Technology?
Third-party risk management is evolving beyond just ensuring regulatory compliance. While adherence to regulations remains crucial, there’s a growing emphasis on enhancing risk visibility, transparency, and process efficiency.
As the third-party ecosystem expands, organizations are seeking streamlined and automated solutions to manage the intricacies of these relationships. The shift underscores the need for a proactive approach, emphasizing both efficiency and a clear understanding of potential risks in an ever-growing network of third-party partnerships.
Reality TV show competitions emphasize the importance of adaptability, strategic thinking, and continuous monitoring in managing third-party relationships, drawing parallels to the business world. Understanding how these elements drive business success is a critical facet of organizational compliance.
Watch our full webinar here: Five Lessons about Third-Party Risk You Can Learn From Reality TV Shows.