Jai Chinnakinda's blog

Why organizations need to adopt an Integrated Third-Party Governance and Risk Management approach?

Image of Third-Party Risk Management

SIG University Certified Third-Party Risk Management Professional (C3PRMP) program graduate Jai Chinnakonda shares why every organization should adopt integrated third-party risk governance and management into their team structure.

Organizations increasingly depend on third-party service providers of varying sizes, including start-ups, to meet the digital age challenges of technological innovation and heightened competition. In a quest to succeed, organizations involved in digital transformation initiatives partner with more innovative start-ups, thereby increasing third-party risk. There is a progressive shift from a traditional 'cost' focus to a 'shared risk' and 'value-driven partnership.

This is also a growing reflection of organizational recognition that third parties can create strategic win-win opportunities. These new-age partnerships require a different approach to managing third-party risks. Organizations that can continuously monitor and take on calculated risks with their engagement with third parties are the ones that will be able to Stay Ahead. This article reflects on how technology can help support a new Integrated third-party governance and risk management approach.

Traditional Third-Party Risk Management Approach – the challenges 

Traditionally, organizations had relied on total upfront due diligence for risk mitigation. This approach attempts to identify potential third-party risks upfront before contracting, resulting in longer onboarding time. Typically, this involves sharing due-diligence questionnaires and collating responses from third parties. This only provides a point-in-time assessment – a highly ineffective approach prone to failures.

Jai Chinnakonda, Co-founder of ENGAIZ, ENGAIZ Inc.

Drive an Effective Governance Program with Technology

Artificial intelligence and machine learning technology can help organizations foster a culture of innovation with their third parties.

Jai Chinnakonda, co-founder of a provider technology start-up, enrolled in SIG University's Certified Third Party Risk Management Professional (C3PRMP) program to learn how he can better serve his clients by gaining a more thorough understanding of third-party risk management best practices.

In the C3PRMP program, students focus on best and emerging practices to identify, assess, manage and control third-party risk throughout the lifecycle of relationships, and learn how to align risk fundamentals and frameworks with risk culture to develop the essential tools and controls for effective governance.

The digital age is seeing an increased dependence on third-party service providers of varying sizes – including start-ups – to meet the challenges of technological innovation, cost, demand for service excellence and heightened competition. 

Organizations are often locked in a love-hate relationship with their vendors as they struggle to meet expectations, sometimes both ways. In today’s digital journey, no organization can thrive on its own. To create true value for your organization and help meet business objectives, your organization will need to build a lasting relationship with your third parties. Organizations will need to adopt the art and science of engagement.

The business ecosystem is experiencing a fundamental shift. Organizations are moving away from purely cost-savings partnerships to value-generating risk-sharing partnership models. As the third-party ecosystem grows, the ability to manage and govern third parties is becoming more critical to success.

Jai Chinnakonda, Co-Founder, ENGAIZ