Third-party risk management is moving beyond regulatory compliance to become a strategic enterprise capability, with industry leaders arguing that organizations must combine collaboration, technology and strong governance to balance innovation with resili
Third-party risk management should no
longer be viewed as a regulatory hurdle but as a strategic function capable of
strengthening operational resilience, supporting commercial decision making and
enabling innovation, senior industry practitioners argued.
As organizations face expanding
regulatory expectations, increasingly interconnected supply chains and rapidly
evolving artificial intelligence capabilities, they said the future of TPRM
depends on moving away from fragmented oversight toward integrated enterprise
risk management.
Speaking during a panel discussion at
CeFPro's Vendor Risk Europe conference, participants from banking and financial
services organizations agreed that success increasingly depends on
collaboration across procurement, operational resilience, technology,
cybersecurity and the business itself.
Rather than operating as an isolated
control function, TPRM must become embedded within day-to-day business
processes while maintaining effective governance and independent oversight.
The Senior Third-Party Risk Manager
at a major mutual financial institution described the transformation as a
gradual process requiring sustained engagement with business stakeholders.
She explained that her organization
had shifted from task-based guidance toward outcomes-led frameworks supported
by close collaboration with procurement and supplier relationship teams.
"There is no quick win,"
she said. "The effort is definitely worth the reward."
Making regulatory expectations
meaningful for business users, rather than simply interpreting new rules, has
been central to repositioning TPRM as a strategic enabler, she added.
The Senior Director of Corporate
Procurement and Vendor Management at a major European bank outlined a similar
transformation.
Having inherited a decentralized
operating model, he explained that his institution centralized procurement,
outsourcing and third-party risk activities into a single first-line function
supported by one technology platform and standardized processes.
"You need to explain the risk
ownership and the business criticality in the easiest way possible," he
said. "Please try to take everything away from them and let them
concentrate on those two things that matter."
Simplifying responsibilities enables
business units to focus on customers while specialist functions provide
consistent governance, he argued.
Preparing for regulatory change has
also become increasingly technology driven.
The Head of Operational Resilience
and Third-Party Risk Management at a UK digital bank explained that artificial
intelligence now performs horizon scanning, regulatory gap analysis and
traceability exercises that previously consumed months of manual effort.
"We spend no more than a week or
two actually getting to the point of what is our gaps, what's our remediation
plan," he said.
That allows organizations to dedicate
more time to implementing improvements rather than interpreting regulation.
As first-line capabilities mature, he
suggested that TPRM teams can increasingly focus on supplier partnerships,
value creation and organizational efficiency instead of administrative
activities.
Panelists repeatedly emphasized that
organizations should resist treating new regulations such as DORA and emerging
third-party requirements as isolated compliance exercises.
