By Patrick Van Hull
The notion of risk management as a static, formulaic process is not only outdated but also a liability. The variables shift constantly and simultaneously, rendering antiquated approaches a drain on already limited time and employee capacity. Understanding and operationalizing resilience is crucial in this environment where everything is interconnected—it’s a matter of survival.
Consider the heightened scrutiny financial institutions face regarding third-party risk:
- Recent regulations in New York mandate financial services organizations intensify oversight of third-party service providers, recognizing the potential for cascading impacts from breaches linked to third-party security failures.
- New cybersecurity directives from the Securities and Exchange Commission compel companies to transparently disclose monitoring mechanisms for third-party providers.
- In Canada, the Office of the Superintendent of Financial Institutions (OSFI) now holds companies accountable for “risks related to all third-party arrangements,” emphasizing “accountability for business activities, functions, and services outsourced to a third party.”
As these and other regulatory guidelines reflect an increasingly stringent landscape, non-compliance can carry severe monetary penalties and reputational damage. A recent deep dive into third-party risk management hosted by Interos and CefPro found most financial services executives anticipated increased enforcement action and regulatory fines for non-compliance.
Strategies for Enhanced Risk Management
Amid this complex and potentially costly environment that transcends industries, the need for precision in risk management has never been more acute. Organizations must identify and prioritize critical risks immediately, ensuring resources are allocated where they will significantly impact their revenue and resources.
Comprehensive frameworks, tailored risk modeling and monitoring practices, clear policies and procedures, and continuous assessment capabilities are essential to narrowing the gap between manual, inefficient processes and continuous, forward-looking risk management strategies.
While investing in advanced risk management capabilities may seem daunting, especially when resources are already stretched, operational resilience is emerging as a lifeline in the face of economic volatility. The head of third-party governance at a premier global bank said, “sharing the capabilities and benefits with other teams is the key to building a strong and resilient enterprise for the future.”
The returns are “invaluable” as organizations minimize disruptions and seize growth opportunities by taking a proactive approach to risk management. This strategic imperative protects operations and reputation, driving long-term value.
At Interos, we understand the need for a new approach to risk management. That’s why we built Resilience Watchtower™ – a groundbreaking solution that provides unparalleled precision and agility to navigate third-party complexities across global supply chains. This latest innovation in resilience prioritizes at-risk suppliers based on their impact to the business. By contextualizing intelligence, the technology enables proactive and tailored vulnerability mitigation to reduce the financial impact of supply shocks that cost the global economy $2 trillion annually.
Case in point: many large financial services companies are rightly concerned about whether small but still critical vendors can withstand cyber-attacks. One Interos banking customer manages this vulnerability by combining their custom inputs with the risk factors most important to their organization. This creates a shortlist of third parties they need to target for increased oversight. Aligning their bespoke risk-model with their business needs allowed the customer’s risk team to take faster and more precise mitigation actions.
Driving Long-Term Value with Resilience Watchtower™
In a world where every decision has cascading consequences, investing in advanced risk management capabilities is no longer a luxury – it’s essential for growth and profitability. Indeed, Interos customers gain an estimated $3 million in annual cost savings for every 10,000 suppliers they map, monitor, and model. With Resilience Watchtower™, organizations can strengthen their operations, safeguard their reputation, and capitalize on new opportunities.
See Resilience Watchtower in action here.
