Four Paths to Managing Third-Party Risk in the Digital Era

Third parties play a critical role in organizations undergoing digital transformation. Partnerships with third parties often represent the fastest, most efficient way to deliver new digital technologies an organization is eager to adopt. When a third party becomes part of an organization’s operations, its strengths become the larger organization’s strengths—but so do its weaknesses, and that’s where risk often lies. Will a third party expose a customer’s personal data or financial details? Will a third party’s underperformance reflect on the overall organization? Will its failure to deliver on a project threaten the project’s viability? These are just some examples of the risks of working with third parties. And the more third-party relationships the organization forms in pursuit of digital transformation, the larger the potential risk looms.