Third Party Risk Management: Beyond Vendor Questionnaires
Most organizations are drowning in third party risk “management” that doesn’t actually manage risk. It just creates overhead.
Most third party risk programs revolve around compliance rituals: 47-page questionnaires, spreadsheet based risk ratings without clear criteria, annual refresh cycles - none of which change how vendors are actually used or governed.
Sound familiar? This isn’t risk management - it’s security theater. The problem? We’ve confused activity with effectiveness. We’re managing paperwork, not risk. Most third party risk programs focus narrowly on “cyber risk” - usually meaning “do they have SOC2”?
But the risks that actually threaten business operations are broader:
- Operational dependencies: What business processes rely on this provider? How quickly could we recover if they went down tomorrow?
- Data flows and sensitivity: What data do they access, process, or store? What’s the impact if that data is compromised or becomes unavailable?
- Concentration risk: Are we too dependent on a single provider or a cluster of interconnected providers? What happens during a sector-wide outage?
You can’t eliminate third party risk - modern business depends on external providers. But you can enable the people who interact with vendors daily to identify, assess, and escalate risks effectively.
Without clear roles, tools, and decision rights, risks stay invisible until they become incidents:
- Procurement teams can’t assess operational impact without risk context
- Business owners can’t make informed trade-offs without understanding dependencies
- IT operations can’t plan resilience without knowing what matters most
The challenge isn’t building perfect risk models - it’s creating systems that help real people make better decisions about real risks.
Over this series, we’ll build a practical approach to third party risk management that works in the real world. Next up: governance and accountability - who decides what, when? Then we’ll work through the entire service lifecycle from pre-engagement to exit planning.
The goal? Move from checkbox compliance to conscious risk management. From overhead to enablement.
What’s your biggest frustration with third party risk management today - the endless questionnaires, unclear ownership, or something else entirely?