Reprioritizing Your Third-Party Risk Management Program — Managing the Relationship After the Contract Is Signed
In a recent discussion with Kairi Isse from Diligent, we explored the importance of ongoing monitoring in managing third-party risk relationships, especially after a contract is signed. This crucial process minimizes risks such as data breaches and bribery, and also mitigates potential reputational damage. The use of AI-driven ongoing monitoring tools helps sift through data effectively and ensures compliance while minimizing risk. The design and implementation of these tools should be customized to your organization and include databases, sanctions watch lists, adverse media, and transaction monitoring. An essential part of the process is the human element, which validates the data before making final decisions. Regular screening and transaction testing should persist even after the contract is signed, creating an auditable document trail for regulatory purposes. With these steps, a company can ensure that its third-party risk management program is efficient throughout the entire lifecycle of third-party relationships.
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Are you a compliance professional tasked with managing third party risk relationships? Are you overwhelmed with the sheer amount of data that comes with that responsibility?
To answer these and other questions, I recently talked with Kairi Isse, Diligent’s Managed Services Group Manager, to discuss why management after the contract is signed is the most important part of the third-party risk management cycle.
In this 5-part blog post series, sponsored by Diligent, I will consider the full range of third-party risk management. You can explore Episode 1 on third-party risk mitigation here and Episode 2 on due diligence here.
In this episode, Kairi and I discuss the importance of ongoing monitoring and why it is critical for modern companies to understand the risks posed by their third parties. We also consider the uses of an AI-driven ongoing monitoring search tool, allowing a customizable, auditable way to ensure compliance and reduce risk.
Join us as we explore this most critical step on the lifecycle of the third-party risk management — managing the relationship after the contract is signed.
1. The Importance of Ongoing Monitoring — Ongoing monitoring for third-party risk management is key to minimizing risks of data breaches, bribery and fines.
Through proper monitoring and management of third parties, companies can ensure that their vendors are not putting them in a vulnerable position. In this interconnected world, third party risk is a significant compliance threat and can cause damage to a company's reputation, leading to potentially hefty fines and, perhaps more importantly, reputational damage.
Utilizing an AI-driven ongoing monitoring search tool can help reduce the haystack of data and find the needle, as well as provide a human element to review and analyze the watch list screen results. The key is to ensure their ongoing monitoring is effective and efficient throughout the entire lifecycle of their third-party relationships.
2. Design and Implementation of Ongoing Monitoring — Designing and implementation of ongoing monitoring that works in practice is a critical step in managing a third-party relationship after the contract is signed.
Utilizing an AI-driven ongoing monitoring search tool is essential for a successful third-party risk management relationship. It is important to customize the search to focus on the right data for your organization, as this will make it easier to find the needle in the haystack.
An AI-driven search tool should include all the big databases and sanctions watch lists, as well as adverse media, to ensure that the third party poses no regulatory risk after the contract is signed. There should also be transaction monitoring which reviews the sales or other transactions by the third-party. Finally, never forget the human element, to ensure that the data is correct and validated before final decisions are made.
3. Analyze and Validate Through AI-Driven Search Tools — To analyze and validate watch list screen results and consider only true matches for further review, utilize an AI-driven ongoing monitoring search tool that includes all the major databases, sanctions watch lists and adverse media.
You should customize usage to your company’s risk profile, industry and any compliance regulations your organization must meet.
Next, review the search to determine if they are true matches or false positives. This helps to reduce the amount of noise and unnecessary data, as well as provides an auditable trail for every action. These actions will help create an auditable document trail which can be presented to auditors or regulators.
4. Continuous Improvement Through Ongoing Monitoring — Continuous improvement is based upon your organization’s ongoing monitoring.
Here, an audit trail demonstrating the company’s maintenance of ongoing monitoring is critical. The Fox Maxim of "Document, document, document” is still alive and well in the era of AI.
Moreover, this allows your organization to customize their search to focus on the right data for their organization and industry, eliminating the noise from irrelevant data sets. Once again, the human factor comes into play through the review and analysis any potential matches from the AI searches to validate true matches. All of these steps should be auditable, recording every action taken in the system, allowing a company to demonstrate their continuous improvement based upon ongoing monitoring.
Managing your third-party relationship after the contract is signed is still the most a critical step any successful third-party risk management protocol. A well-designed and implemented compliance program should include regular screening of global databases and adverse media, even after the contract is signed.
Transaction monitoring should also be used to test individual sales for any issues. An AI-driven ongoing monitoring search tool helps reduce the haystack of data and find the needle, while a human element helps review and analyze the watch list screen results.
With these steps, your organization can be confident that your third-party risk management program is effective and efficient throughout the entire lifecycle of your third-party relationships.
For more on managing long-term relationships with third parties, learn best practices for regularly and efficiently monitoring your third-party vendors’ health here.
Listen to Kairi Isse on the podcast series here.
Learn how Third-Party Risk Management from Diligent can help your organization with implementation and maintenance. Request a demo today.