What’s Your Risk Tolerance? Why Companies Fail to Build Resilience
In a perfect world, organizations would aim to eliminate all risks. However, risk, and more specifically third-party risk, is ubiquitous. It stems from a wide array of areas that impact ecosystems of third parties, including but not limited to geopolitics, extreme weather, human rights violations, regulatory compliance, currency fluctuations, and both cyber and physical security.
In truth, no matter how robust the risk management program is, not all risks can be prevented. It’s not a question of if a third-party incident will occur; it’s a matter of when, how severely it will impact your business, and what you’re willing to do to stop it.
Effectively navigating complex risks and their potential impacts requires a strategic, systematic approach, unflinching executive alignment, and a collaborative response – a skill that builds operational prowess and a shared commitment to resilience. And this becomes even more of a challenge when third parties – vendors, suppliers and external partners – are involved.
The Complexity of Third-Party Risk
The CrowdStrike outage, AT&T breach, and the Red Sea attacks are recent examples of the potentially extreme and varying impacts of the risks that lay within third-party vendors.
Whether it arises from a first-tier third party or nth-tier in the supply chain, external threats risk financial outcomes, operational efficiencies, service levels, brand reputation, intellectual property and business continuity.
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